Supply Chain Award

For the past two years, The Procter & Gamble Company (P&G) has earned a top three spot in AMR Research's "Supply Chain Top 25," a report that identifies manufacturers and retailers that exhibit superior supply chain capabilities and performance. According to the report, P&G scored highest in peer opinion, reflecting widespread recognition that its Consumer-Driven Supply Network operating strategy embodies much of the industry's demand-driven ideal.

 

Despite being deemed one of the best, P&G understands that there is always room for improvement and continually strives to enhance its Consumer- Driven Supply Network, which focuses on redesigning the supply chain to better meet consumer and customer needs and win at the two moments of truth (in store and at home).

 

"We continue to improve work processes and employ enabling technologies from the shelf back to be faster and more responsive," says Mark Kremblewski, global business expert, demand planning, P&G.

 

In an attempt to rectify challenges that it was experiencing with short-term demand sensing, P&G piloted Terra Technology's Demand Sensing (DS) solution after learning about encouraging results that The Campbell Soup Company realized when using the tool. The objective of the pilot -- and subsequent roll out -- was to reduce forecast error, but more importantly, drive improvement in inventory reductions while optimizing supply chain operations and delivering excellent customer service.

 

At P&G, Terra Technology's DS solution is a bolt-on solution that works with SAP to improve short-term forecast accuracy. It enhances existing demand-planning systems, integrating seamlessly with SAP R/3 and APO. DS takes the existing forecast information from the weekly demand plan, combines it with real-time demand signals and applies pattern recognition algorithms to automatically create granular forecasts that are refreshed on a daily basis for every product/location.

 

A benchmark pilot that provided software modeling to several P&G businesses in several countries proved that the DS could reduce short-term forecast error more than 30 percent. Post the success of its pilot success, DS was deployed in one business in Western Europe in March 2006. Forecast error was again decreased by more than 30 percent, which enabled a more than a 10 percent reduction in P&G's safety stock.

 

DS is now live in more business segments in Western Europe and North America and a global roll out will continue over the next couple of years.

 

"We expect to further increase cash flow once the software is rolled out globally," says Kremblewski. P&G is also seeing productivity gains. Previously, demand planners had to manually adjust short-term forecasts and inventory targets. DS now automates these processes. For example, reviewing inventory targets used to take planners several days each quarter; now, virtually all of the preparation for these reviews has been automated allowing demand planners to focus on areas where they add real value, analyzing trends, markets and customer activity.

 

 

Outstanding Achievement Awards

 

General Mills As one of the world's largest food companies, General Mills Inc. is actively working to build capabilities to integrate demand signals into the forecasting process. Currently, the brand owner of Betty Crocker, Yoplait, Haagen-Dazs, Pillsbury, Green Giant, Old El Paso and Cheerios is using Vision Chain, a provider of demand signal repositories (DSR), to cleanse and analyze multi-retailer point-of-sale (POS) data to strengthen category management and improve overall business performance at the store level. The resulting multi-retailer DSR offers a centralized architecture with a lower total cost of ownership than point solutions would provide.

 

"Much of our effort to date has been on building a DSR and working with retailers to bring their data into a single repository within our organization," says Dave Moline, senior manager - Strategic Planning/ Technology for General Mills. "Once we have the data in-house, we can then leverage it in upstream activities such as the integration into our forecasting systems and also in downstream activities that enhance our ability to collaborate with retailers and execute instore activities."

 

General Mills' focus on a DSR provides a foundation that will lead to benefits such as increased revenues, improved product in-stock rates, and enhanced product decision- making and productivity across the enterprise.

 

 

ConAgra Foods
To deliver customer service that exceeds expectations, significant supply chain savings -- both in terms of cost of goods sold and working capital -- and build world class supply chain capabilities, ConAgra Foods Inc. deployed SAP APO and Enterprise Inventory Optimization by SmartOps

 

"Enterprise Inventory Optimization has helped support all of these goals by establishing demanddriven inventory policies that enable ConAgra Foods to reduce inventory across the supply chain while improving customers service," says Bob J. Masching, vice president - Sales & Operations Planning, ConAgra Foods. So far, ConAgra has achieved:

Improved collaboration, achieving a single number demand plan

Improved case-fill and store in-stock percentage

Double-digit forecast error and bias reduction trend

Finished goods inventory reduction of 7 percent

Production cycles synchronized closer to demand and

Supply chain savings/productivity ahead of targets

 

Moving forward, ConAgra will focus on improving external key customer collaboration, says Masching. CG