AkzoNobel: Painting a Better Picture of Demand
When paint and specialty chemicals producer AkzoNobel looked to improve customer service and raise return on capital by cutting excess inventory, it turned to Terra Technology. Alain Crottaz, EMEA Planning Director at AkzoNobel, explains the business drivers behind the company's decision to implement Demand Sensing and Multi-Enterprise Inventory Optimization in Europe and Africa.
"As part of a larger supply chain efficiency program, we were looking for a single solution to achieve three strategic goals: providing higher customer service, cutting excess inventory (in particular, safety stock driven by elevated forecast error), and transforming available point-of-sale (POS) data into value for AkzoNobel and its customers," explains Crottaz.
So why did AkzoNobel choose Terra? With ten years of experience at Coca-Cola, Crottaz knew that FMCG (Fast-Moving Consumer Goods) companies like Procter & Gamble successfully use POS to improve forecast accuracy and better serve retailers. "We focused on Terra because their Demand Sensing solution is the only one to have solid references from multinational companies with large, complex supply chains," says Crottaz. "Their software is used by some of the world's largest manufacturers to plan demand in more than 160 countries."
The results of a pilot program made the decision clear. Weekly forecast error for AkzoNobel's paint business in United Kingdom, France, Germany, Netherlands and Ireland was reduced by 29% for the first week of forecast. Demand Sensing works seamlessly with AkzoNobel's current SAP systems. Crottaz explains: "Demand Sensing sits between our SAP Demand Planning (DP) and Supply Network Planning (SNP) modules. Forecasts are sent from Demand Planning into Terra's Demand Sensing engine, along with other current demand signals from the supply chain, such as retailer POS. Terra's algorithms analyze all of this data to create the most likely prediction of future sales. Demand Sensing then publishes daily forecasts for the next 90 days directly to SNP."