Leading Snack Producer Cuts Costs and Optimizes Its Supply Chain with New Demand Planning Tool

Situation

KiMs has a product line that includes 8 of the 10 best selling chips in Denmark. This Danish company, which has been in business for almost 40 years, employs more than 260 people, processes around 5 tons of potatoes an hour and ships approximately 100,000 pallets or 10,000 tons of snacks per year. KiMs is considered one of the five strongest brands in Denmark.

KiMs wanted to increase the number of customer orders fulfilled. Its forecasts were not always accurate and there were often production stops due to missing raw materials. There was also too much capital tied up in high stock levels in its warehouses.

Forecasting in the old system was a time-consuming process and the knowledge gained was not reused. KiMs couldn't take advantage of any historical data from past sales campaigns. The data it did have was hard to analyze and required a great deal of manual input. This, coupled with the fact that the company had no way of measuring a campaign's success, meant that KiMs was looking for a tool that could address all of these issues.

The company needed a tool that would make it better at predicting future sales. Previously, the employees used several different tools for the different steps of the forecast process and these tools were not integrated. What KiMs needed was a single application to handle its forecasting process.

Solution

KiMs implemented Microsoft® Business Solutions–Axapta® in June 2003. Due to the success of this implementation, Microsoft invited KiMs to be the test environment for a newly developed add-on product, Microsoft Business Solutions Demand Planner–Axapta. The configuration of Microsoft Axapta that KiMs implemented made KiMs an attractive client. KiMs wanted the new forecasting tool to enable it to:

• Unify and streamline processes.

• Help identify the impact of campaigns.

• Lower inventory levels.

• Be easy to use.

The first real test of Microsoft Demand Planner consisted of the live implementation and subsequent rollout in the working environment at KiMs. As a direct result of this process, Microsoft Demand Planner has become a valuable tool that complements Microsoft Axapta, giving KiMs the forecasting and business overview that it needs.

Benefits

Greater Forecast Accuracy

The accuracy of forecasts is essential for a company like KiMs. With the data it now has access to in Microsoft Business Solutions–Axapta, coupled with the overview that Microsoft Demand Planner provides, it now has a much better way of following up on forecasts and can forecast with greater accuracy.

KiMs is now able to anticipate customers' demands much more precisely. By using Microsoft Demand Planner, there are no longer production stops due to missing raw material and there is an improved balance between demand and supply.

Pernille Kjær, Purchasing and Logistics Coordinator at KiMs, explains: "Now I have the same up-to-date information that the other departments have. I can click back and forth between the different screens to gain a good view of what has happened during the week. It's easy to find numbers in Microsoft Axapta but with [Microsoft] Demand Planner, I can see all the information I need gathered in one place."

Because KiMs now has a central database, rather than multiple spreadsheets, it has increased the organizational participation in the demand-planning process without increasing the administrative burden. This has meant that other departments, such as marketing, are also involved in the forecasting process, which has improved the forecast quality.

Britt Hougaard, Brand Manager at KiMs, says: "Now our input is also included in the forecasting process. This is definitely an advantage because we know what's going on in the different supermarket chains, what campaigns are occurring and when a new product is going to be launched. With the introduction of [Microsoft] Demand Planner, we can forecast directly in the system."

Improved Customer Service

By introducing Microsoft Demand Planner into its business processes, KiMs is able to align its operations with customer demand. As a result, KiMs has become more "demand-driven." This means that it meets its customers' demands and can respond and adapt to market changes more effectively, at the same time maintaining its competitive edge.

As a direct result of greater forecast accuracy, KiMs has also been able to offer far greater customer service. One of the key advantages is being able to give the customers what they need at the exact time they need it. With Microsoft Demand Planner there are fewer back orders, which also mean fewer dissatisfied customers.

Hougaard describes this benefit: "[Microsoft] Demand Planner helps us to supply the right products at the right time. We can see whether or not we have forecasted well and if we haven't, we know where we need to take action. Our goal is 100% delivery performance to our customers. It is still too early to be specific in terms of figures, but we have improved our delivery performance and [Microsoft] Demand Planner has definitely contributed in helping us to meet our goals."

Reduction of Operating Costs

Because KiMs is now able to plan better, it can optimize the balance between its delivery performance and inventory levels. Employees spend less time on the forecasting process and they have minimized the time spent on updating purchase orders and calling suppliers. All of this has resulted in a better use of production assets. There are fewer production stops due to missing goods, less time spent on order updates and KiMs is now able to focus its production and sales resources on the products and customers that matter.

"It is really great that we can now regularly see what has been forecasted and compare it to what we've actually sold," explains Kjær. "This is particularly important to the logistics and production departments in helping us to identify problem areas. We can pinpoint the products that continually deviate from the forecast and interrupt our production plan. These products prevent us from optimizing our production runs and therefore cost us money. [Microsoft] Demand Planner makes it possible for us to locate these problem products as early as possible in the process."

Utilizing Historical Data

The Microsoft Demand Planner and Microsoft Axapta allow KiMs to access historical data. Sales and marketing people gain insight into current and expected customer behavior based on past buying patterns and current promotions. KiMs can now utilize the feedback from business partners, customers, shipping partners, and suppliers.

Hougaard explains: "The historical data is very important in helping us to learn to be better at forecasting. It is also vital in dealing with the seasonality of our products, so we can also forecast as accurately as possible during our peak periods. The historical data gives us an idea of what we need to forecast during these peaks."

"Another great advantage of [Microsoft] Demand Planner is that we can now measure the success of our campaigns," continues Hougaard. "We are able to see the normal sales differentiated from a particular campaign, so we are much better equipped to determine whether a particular campaign was a success."`

Reduced Inventory Levels

Inventory control has also been improved because Microsoft Demand Planner helps KiMs reduce its inventory levels. This is an area that is particularly difficult when a company has products with expiry dates. It is important to not have too much stock tied up in your inventory but not too little either.

Kjær explains: "We strive to have a specific number of weeks in stock. The best-before dates mean that we can't have too many products on stock.

We use the historical data that [Microsoft] Demand Planner gives us access to, to help us find out what the reasons are for having too much stock or too little. The data gives us an explanation about our current situation and makes it easier for us to make the necessary adjustments."

In answer to whether Microsoft Demand Planner met the original criteria for a forecasting tool, Hougaard concludes: "[Microsoft] Demand Planner is very easy to use. It's logical and one of the best features is that it's integrated with Microsoft Axapta, which means you can see everything in one screen. We no longer have to have several programs or spreadsheets open to get an overview. As a result, we now have more unified and streamlined processes.

We trust our data more and can judge the impact of our campaigns. [Microsoft]Demand Planner is an essential tool for us in marketing and it has meant that the Key Account Managers can get back to their customers and can talk about campaigns with greater knowledge."

Microsoft Business Solutions

Microsoft Business Solutions offer integrated business applications and services that allow small and midsize organizations and divisions of large enterprises to connect employees, customers, and suppliers for improved efficiency. The financial management, customer relationship management, supply chain management, and analytics applications work with other Microsoft software, including the Microsoft Office System and the Windows operating system, to streamline processes across an entire organization. This gives businesses insight to respond rapidly, plan strategically, and execute quickly. Microsoft Business Solutions are delivered through a worldwide network of channel partners that provide specialized services and local support tailored to a company’s needs.

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