Deliveries across 15 European markets, with revenues exceeding €80 million annually
Challenge
The manufacturer managed production volumes based on target inventory derived from historical experience. Due to the industry’s pronounced seasonality, production levels were significantly increased ahead of peak demand seasons. While this approach ensured availability during high-demand periods, it often overstocked slower-moving items during off-seasons, resulting in excess inventory costs and inefficiencies.
Solution
To address the challenges of seasonality and inventory management, we developed and implemented a data-driven demand planning system. This solution utilized a detailed analysis of three years of historical sales data categorized by individual products and product groups. Monthly sales indices for each category were calculated, creating a statistical foundation for projecting future demand.
The demand forecast process followed these key steps:
- Category Forecasting: Future demand was estimated based on statistical indices reflecting monthly sales trends within each product category.
- Product-Level Allocation: Forecasts at the category level were further refined using product-specific market share data to estimate individual product demand accurately.
- Sales and Operations Planning (S&OP): Demand plans were validated and adjusted in bi-weekly S&OP meetings, incorporating input from the sales team and accounting for ongoing and planned market activities.
Six-Month Planning Horizon: The forecast data served as a basis for production and materials requirements planning over a six-month horizon, ensuring better alignment between production capabilities and market demand.
Outcome
This tailored approach led to more accurate production planning reduced inventory costs by minimizing overstock, and improved responsiveness to market demand fluctuations.
