Connecting Demand Planning to ERP

INFORMATION: Free information is available from DEMAND SOLUTIONS on the subject in this story. Click here to request a copy

FCI Automotive Austria, GmbH, manufactures automotive electrical connectors used by Volkswagen, General Motors, Renault-Nissan, Ford, DaimlerChrysler and BMW. More than one million parts are produced daily at the company's Mattighofen site, where the annual consumption of raw plastic amounts to roughly 2,300 tons.

The company was using forecasting software developed in-house for two years in the 1990s. Then the division's Paris headquarters decided to implement one standard manufacturing/ enterprise resource planning (ERP) system throughout its worldwide enterprise, impacting the workflow and disparate systems used by its 22,000 employees.

After five years of using a production planning system (PPS) implemented around 1995, Paris switched the company to a MFG/Pro ERP system in 2001. Unfortunately the forecasting capabilities of the ERP system were limited and, as was the case with the previous PPS, there was no integrated statistical reporting without exporting data to a spreadsheet. FCI began to search for a true demand planning system to interface with MFG/Pro that delivered ease of use, low overhead and, most important, reliable results.

"Manufacturing an assortment of approximately 1,200 different products, our management relies on high quality demand forecasts for profound decisions," says Helmut Gerner, supply chain manager of FCI Austria, regarding the challenges he faces every day.

In the spring of 2002, the company's headquarters declared that demand planning worldwide would be handled by Demand Solutions Forecast Management (DS FM) and Demand Solutions Sales & Operations Planning (DS S&OP).

"The predicted development of our business for the next 12 months constitutes the primary information for decisions regarding investments, human resources and suppliers," says demand planner Andreas Lutsch. "Detailed data is captured from the ERP system and downloaded to Demand Solutions, where we aggregate the item codes into product families for review. We defined 61 such families, plus 16 product groups based on part-specific criteria in order to reduce the effort required to look at such a large number of parts. We perform a monthly review of planning data. For management reports, we use the 16 product groups; for the daily work, we use the 61 families."

Demand Solutions was installed in March 2002. Implementation was relatively simple, but continuous improvement is a primary objective of the S&OP process. "This is a very detail-oriented job, since the steps in the process go down to the review of the individual item level for possible discrepancies, " Lutsch says.

Historical sales data are captured from MFG/Pro and used as the basis for a "best fit" formula. Predictions regarding new products are communicated from project management and account managers in the sales and marketing department.

"Most important are the analysis features and exception filters," says Lutsch. "My first goal was to match the forecast quality to at least the previous level of accuracy with Demand Solutions. This target was reached in November, with the graphical displays and analysis possibilities providing additional benefit. Statistical reports and gap tracking identify weaknesses. Shortages of material, production capacity and human resources are traced early enough to permit management to initiate corrective action, " Lutsch says.

Lutsch says he learns something more every day. "It takes a while until one can use all the benefits of any software package. Out of the 1,200 parts, 770 are actually forecasted. Important management decisions can be made on family data, but we also plan and schedule production. This requires a good forecast on the parts level."

As for the impact of Demand Solutions on his work, Lutsch says the time it takes to prepare monthly forecast data has been reduced from five working days to one or two. He says the time saved can now be spent on more critical products and better preparation for the monthly S&OP meeting.

Lutsch adds that the next step is to exploit more of the advanced capabilities inherent in DS S &OP, which is expected to save additional time.

INFORMATION: Free information is available from DEMAND SOLUTIONS on the subject in this story. Click here to request a copy

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