Keeping shelves stacked and customers happy
A specialty retailer had suffered from empty shelfs in the previous high season. The reasons were unclear, but the company could not afford another lost peak season.
Empty shelves were leading to unsatisfied suppliers and customers
In the previous high season, the specialty retailer had seen many shelf places empty out without warning. The demand forecasting and replenishment cycle was not filling the shelves according to customer demand. Suppliers were claiming that they were losing sales because of the shortage and customers were unhappy to find that stores did not have the product they wanted. The Head of Supply Chain suspected that the challenges might be related to system functionality and how the process was set-up, but a definitive answer seemed elusive.
Simple changes to parameters went a long way to fixing the issue
August built a detailed understanding of how the ordering system created demand forecasts and gave suggestions for replenishment orders. This required a surprisingly detailed understanding of the algorithms used by the system. Also, the human process around the system was broken down into pieces. A detailed understanding of the dynamics revealed several options to improve shelf availability. Improving demand forecast accuracy turned out to be only a small part of the problem. Changing the parameters in the replenishment model was much more effective at improving shelf availability in the peak season.
Several longer term improvements to the processes and practices were suggested as well – these would have a more indirect impact on the original target, but would go a long way to averting similar problems in the future.
Improved availability contented customers and satisfied suppliers
Shelf availability improved drastically for the next peak season. An internal discussion about the need to develop critical systems was put on hold and focus was placed on developing the human practices around the ordering process.
Double-digit sourcing savings
A construction industry company chose to renew its indirect sourcing model, which was decentralized and low in maturity. August supported the company in designing and ramping up a new sourcing model. We identified the first savings potential and delivered 12% savings of the addressed spend.
Locally managed and decentralized sourcing wasn’t working
The company, a service provider in the construction sector, had gone through a phase of high growth and M&A. This had led to locally managed and decentralized operations, where the company was not able to benefit from its large scale. The newly appointed CEO saw this as an opportunity and launched a new strategy. The objective was to realize synergies of scale and improve efficiency by integrating a larger part of the company’s operations. Together with the CEO, August identified sourcing as one of the key areas to drive synergies.
The new sourcing model needed to be ramped up, while realizing benefits in categories
We conducted a detailed as-is overview and spend-baseline analysis. This revealed a fragmented supplier base, large numbers of small suppliers and low contract coverage. Then, we helped the new sourcing leader design his target-state sourcing strategy, organization and other elements of a complete sourcing model. Opportunity diagnostics helped us prioritize five sourcing cases where the company launched a savings realization program. We attacked these categories with joint August-Client teams. Gradually the company ramped up new internal sourcing resources and August’s role shifted towards developing internal capabilities, tools and processes.
12% savings in the first categories and a kick-start towards an industry-leading sourcing model
The CEO was glad to see how the company’s sourcing was delivering results. In the first wave of categories, we delivered 12% contracted savings. After that, the new practices were rolled-out to the next categories. The new sourcing leader continued to develop the company’s sourcing model with new capabilities, resources and tools. After several years, the company’s sourcing leader is running a well-functioning and industry-leading indirect sourcing model which delivers annual savings and qualitative benefits.
Optimizing a complex supply chain
A large process industry company needed to improve its service to customers but keep its complex supply chain efficient. Together with the client, August designed a supply chain concept that improved delivery promises to customers. August used Advanced Analytics to vastly improve inventory content and delivery routing.
Delivery performance was insufficient and competitors were creating pressure to improve availability
The company, an industrial manufacturer with a Europe-wide processing network, needed to improve the performance of its supply chain. Sales felt the pressure as competitors were offering good availability, but the supply chain team thought that inventories in the network were not healthy. Sales and the supply chain lacked a common understanding of what an efficient and competitive set-up would look like.
New service levels and product routings were just the start for improving the supply chain
The joint Client-August team benchmarked the competitions’ current delivery promises and planned an improved service promise to up the ante. A series of Advanced Analytics approaches were needed to get to the bottom of the issue. Savings were identified in product routing through a careful analysis of the optimal supply network. Inventory content needed to be revised as well, when genetic algorithms revealed poorly functioning inventory levels. Implications to order-to-delivery process were planned as well.
New services underlined a completely revitalized supply chain
Our client was able to move forward on a commercial launch of its new delivery time promise. Changes in the inventory content were implemented and part of the deliveries were rerouted, which dramatically improved overall cost efficiency. The analysis created a basis for developing automated stock replenishment practices and for renegotiating deals with subcontractors.
Matching demand and supply in equipment rental business
The company was trapped with daily firefighting to fulfill the customer orders, being unable to get the best value out from its expensive assets. August helped to launch new simple short-term replenishment practices and tactical mid-term S&OP process. These led to improved equipment availability and better overall fleet performance.
Daily firefighting for fulfilling the customer orders
The company, operating in equipment rental business, was having challenges in meeting the customer demand with the equipment fleet it operates. Some products seemed to be out-of-stock, some in excess capacity while other products needed to be transported long-distances incurring unnecessary costs. Supply chain people were in constant fire-fighting mode to fulfill customer orders which were always due in ‘tomorrow’. Sales people were doing their best to keep their customers happy in the constant pressure of uncertain availability. The company had practices for capacity planning, but that was done in silos, issues were resolved on ad-hoc basis, time was spent in meetings but with limited fact-base or tools to support decision making. Company’s Supply Chain & Operations leader knew the current situation was in no way ideal and decided it was time to step-up the performance in Sales & Operations Planning.
Simple short-term replenishment & tactical mid-term S&OP process
The first thing we did was an analytical de-composition of the actual customer demand. We understood that the nature of demand varies greatly between different products and customers. Thus, the solution had to take this into account. We tested how advanced statistical forecasting can be used in demand forecasting and concluded which part of the planning problem could be supported with that. Eventually, we designed the target-state Sales & Operation Planning processes which were split to two very different logics: simple short-term replenishment process for certain ’core’ products. And more tactical mid-term S&OP process for making the bigger decisions how to affect demand and supply, based on facts and business-cases.
In order to get the process up-and-running, we designed the necessary process and role definitions plus implemented the first tool which was used to pilot the new S&OP process. August consultant facilitated the S&OP process during its first rounds. This allowed the company to fine-tune the process and embed it as part of company’s new operating routines.
Improved availability for customers, better fleet performance for the company
The company received means how to measure and manage its availability, leading to improved availability and reduced lost-sales. New processes reduced internal hassle. Tactical decisions were made based on facts and positive business cases. This all led to improved overall fleet performance.
Paving the way for an integrated operating model
The client, a leading Nordic construction industry player had defined a new operating model as a one of the cornerstones of its strategy. The strategic ambition was to realize economies of scale and increase competitiveness with a new operating model. The project delivered a new integrated operating model as well as several quantified operational improvement opportunities.
Siloed operations were slowing down efficiency gains
A leading Nordic construction industry player had several regional and independent units with a P&L responsibility in each country. This set-up had been successful in the past, but a more integrated operating model could potentially offer significant efficiency improvements. The company wanted to integrate its operating model to drive economies of scale, boost the sharing of best practices and, thus, improve its competitiveness.
An integrated operating model would clear the way for productivity improvement
August was the key advisor in the transition to a new operating model. The work covered key functions in several countries. The client-August team defined a new organizational structure, enhanced the sales and operations planning process, and made improvements to existing performance management practices. To reap the benefits of the new model, the team also assessed high-potential productivity improvement opportunities.
The new integrated model not only improved productivity but supported sales growth as well
The new operating model was implemented initially in the home market. The results were promising: productivity improved when assets, resources and best practices were shared across regions. Also overall volumes increased as a result of improved productivity and larger available asset pools in the regions. The project clearly supported the strategic ambition to achieve economies of scale with an integrated operating model.