Driving Forecast

Church & Dwight (C&D) makes some of the most recognizable consumer products in the marketplace -- beginning with the Arm & Hammer brand and extending into almost every area of household and personal care. Each year, for the past five years, the company has added new products through acquisitions. Yet while C&D has grown sales and increased cash to shareholders, it has simultaneously reduced days of supply, increased its rate of case fill and improved inventory turns. In January, 2006, J.P. Morgan Securities rated C&D among the top three companies in cash flow management in Household Products and Personal Care, a feat that could not be realized without a sound supply chain strategy, according to Sam Dragotta, senior director of supply chain, C&D.

According to Dragotta, C&D's supply chain costs were comparable with industry standards but still saw room for improvement. In response, the company decided to migrate from a warehouse network to a plant shipment network, a system where the company now handles direct plant shipments versus going from plants to a third-party warehouse to the customer.

"We now ship directly from our plants to the customer," says Dragotta. "It eliminates the middle tier of handling our product." The reduction of product touch points has paid off tremendously, for C&D, according to Dragotta, not only in C&D metrics but also in cost factors.

Gaining Robust Visibility

Even though C&D is streamlining its supply chain by eliminating costly touch points, the company still relies heavily on robust supply chain applications to gain the visibility into its ever-changing business and relies on Manugistics as both a strategic and tactical tool. The supply chain department deals with it on a tactical level while management uses Manugistics on a strategic level to see down the road where business is going, according to Steve Barrow, supply chain manager of household products for C&D.

According to Shara Fash, supply chain optimization manager for C&D, the biggest value that Manugistics has brought to C&D's supply chain is the forecast accuracy.

"We know that forecasting is the root of good deployment and good production planning," says Fash. "Without a good forecast we will be deploying to the wrong warehouses. Without a good forecast we will be producing either too much or too little. Manugistics demand planning and supply planning has allowed us to have a very high case fill and very low inventories."

C&D can now forecast using a number of different methods. One involves analyzing historical data and eliminating redundancies. C&D's forecast accuracy has dramatically improved over the last few years as company planners have become power users of the Manugistics tool and are able to make the correct changes to the system.

"Our customer service levels have risen over the past few years," says Fash. "It's greatly attributed to the Manugistics tool due to its ability to help set the correct safety stock levels."

The Acquisition Factor

In the past five years, C&D has acquired five different companies. This is another area where the company was able to utilize Manugistics in a proactive manner by implementing the forecasts from the new acquisitions and planning those new products to meet timely executions.

For example, when C&D acquired Unilever Brands, the company was able to load historical data from the past three years, thus providing C&D with the ability to forecast with some confidence while determining the appropriate level of inventory and line capacity.

The structure of C&D's supply chain team is set up in a way that ensures supply chain planners know everything about company brands from soup to nuts. "We know what the forecasts are by customer by Church & Dwight warehouse location," says Fash. "We also know where product needs to be produced because we, as supply chain planners, are the people in charge of moving product from one warehouse to another in order to support the stock and support the customer orders that are going to ship."

C&D planners also plan the product at its plants, a different operations protocol compared to its competitors.

"We felt it was necessary that we know everything there is to know about each product," says Fash. "Each planner has anywhere from one large brand or several smaller brands that they plan. They do the forecasting for it, they deploy for it and they plan the productions at the plants for it."

Filling in the Benefits

Pre-Manugistics, C&D was in the low 90 percentile for case fill. Today, the company has reached well above the 90 percentile mark. On-time and in-full rates pre-Manugistics were 82 percent, while today, the company hovers above the 90 percentile mark. C&D has also reduced days of supply from 80 to below 60.

"What's really interesting is that these are not just Church & Dwight metrics that are done internally," says Dragotta.

"These are metrics that are done by industry leaders."

The reduction in days of supply is also saving C&D several millions of dollars even with the additional SKUs and brands. "We added the Elexa Line and we've added the Unilever brands, yet we've still been able to reduce our days of supply and our total inventory dollars," says Andrew Pignatelli, supply chain manager for Personal Care Products, C&D. "That's due to Manugistics allowing us to set the safety stock levels and tell us when to produce at the correct times."

Taking Next Steps

C&D has strived to implement new pieces of Manugistics over the years, which the company says will help business in core areas. For example, transportation management has improved and, because of that, C&D is also looking at inventory optimization as a next step to boost supply chain operations.

"The key benefits in transportation as far as us using the Manugistics software has been the development of work consolidation and optimization," says Chad Whyte, senior manager of corporate transportation, C&D. "It's given us the capability to continue to meet our business needs by expanding our planning horizons to include international affiliates as well as the potential for inbound raw material planning. We've also been able to develop in to certain markets such as direct store deliveries through utilization of the Manugistics software by setting up separate schedules that are specific to those markets and businesses."

Over the past five years, C&D Household Products has grown 67 percent while inventory has been reduced by 10 percent. Manugistics has been the critical asset to achieving those results.

Manugistics impact to the bottom line is very tangible in terms of dollars saved and company performance, says Pignatelli. "If you look at the inventory dollars and case fill, we have maintained even a higher rate of case fill over the last couple of years," says Pignatelli. "But again, our inventory dollars are down and our turns are among the best in the industry and that's directly related to Manugistics."

C&D is currently working with Manugistics on a 7.X upgrade and is also executing demand classification. In the long term, C&D will work with Manugistics to examine point-of-sale data, industry changes and demand supply in an effort to become a made-to-order company versus a made-to-stock company. "We have strategic plans set up with the Manugistics team that we feel we can execute to secure our leadership in the industry," says Dragotta.