Welcome to the SCM Stream

Sponsored by:

Halewood International

Driving Supply Chain Improvements with SAP SCM

• Introduction to Halewood International

• Challenges and Issues in our Supply Chain

• Why we chose SAP SCM?

• The Projects

• Implementation Approach

• Benefits Delivered

• What make our projects a success ?

• Questions and answers

Presentation

Who are we?

• The UK’s Largest Independent Drinks Manufacturer and Distributor

• HQ based on a 30 acre site in Liverpool with overseas operations in Romania, South Africa and China

• Turnover in excess of £250Million and 1500 employees worldwide

• Manufacture and distribute over 400 drinks brands across all sectors of the market – 4 big retailers, wholesalers and on- trade distributors

• Exporting to over 50 countries worldwide

• Company prides itself on innovation and New Product Development is very important to the business

Lambrini

Lamb’s Rum

Tsingtao Beer

Crabbies Alcoholic Ginger Beer

Challenges and Issues

• Poor visibility & consistency across departments

• Forecasting system was not robust and was beginning to creak

• Highly Innovative environment – lots of product change and introductions

• Customers demands increasing and need to be agile

• Promotions – a growing emphasis on promotions which requires flexibility whilst not increasing costs

• Supply chain becoming more complex – multi-site locations

• Production planning not flexible enough to cope with fluctuating demand – offline systems had crept in

• Change to 24-7 production had changed the way in which production was planned – mainly around manning.

Why SCM?

• Already had SAP footprint with ERP and BW • Looked for integration out of the box • Proven solution in use at other companies with similar

products and customers • Needed a robust solution that good “grow” with the

business • SAP provided information and performed a Workshop

to showcase the product to a Senior audience at Halewood starting with Forecasting

• Provided reference sites and we visited these to discuss the use APO and project experiences

Why choose SAP SCM?

Partner Selection

• Needed a proven partner with good understanding of our type of business and the challenges we faced

• Experienced consultants who could engage with all levels of the business

• A company who agreed with our philosophy of knowledge transfer – we like to fully own a system once implemented

• Honest and open approach both in the pre-project phase and throughout the implementation

• A partner with whom we could build a longer term relationship for future developments

• Cost – as with everyone budgets are tight

Partner Selection

Our Partner

• Had good experience on previous APO projects with others in the FMCG arena

• Experienced consultants • Good engagement, especially at Executive level • Approach was to help with the scoping of objectives and

potential business benefits • Ran a business requirements workshop • Built a prototype system with real Halewood data • Played back the output to the business • Provided a good proposal which was well received • Excellent approach through a iterative prototyping model

Our APO Journey – so far

Demand Planning (DP)

APO - DP • Replaced in house forecasting system ( built in

Excel/Access and BW)

• Took in 3 years Sales History from BW

• Cleansed history (where possible)

• Built in the capability to record promotions ( as these now more frequent)

• Ability to understand what effect the promotions have had on uplift

System build

Supply Network Planning (SNP)

Huyton Plant – Liverpool

Bulk Storage & Manufacture

Bottling Storage

Despatch to Customer

External Storage

(Peak Times)

External Supply

Ingredients

External Supply

Dry Goods

External Supply

Cased Goods

Other HIL Company

Manufacturing

I/C Transfers

Our Supply chain 5 years ago

Our Supply chain last year

Huyton Plant – Liverpool

Bulk Storage & Manufacture

Bottling Storage

External Supply

Ingredients

External Supply

Dry Goods External Supply

Cased Goods

External Storage

Subcontract Manufacture

Despatch to Customer

Warehouse Annexe

Warehouse Annexe

Other HIL Company

Manufacturing

APO- SNP

• Reduce number of deliveries in and out/ alleviate pressure on loading bay

• Ensure customer service level of >98% OTIF maintained

• Plan to use the system to assist with planning of stock movements from external vendors and external store to distribution hub

• Use the forecast to drive the stock replenishment rather than a stock controller

• Plan for direct delivery to customer from external storage

Customers

Vendors

Central Warehouse 0100

Ext.Storage 0224

MRP

0001

Huyton Factory

Stock

MRP

0099

Chorley Factory

Net Req.

Net Req.

Current SAP set up for MRP

New set up for MRP

Forecast/ Stock

Net Req.

MRP area:0001-224 MRP area:0001

APO

Vendors

Central Warehouse

Ext. Storage

MRP

0001

Huyton Factory

MRP 0099

Chorley Factory

Net Req.

Net Req.

Forecast/ Stock

Net Req.

Customers Key Customers

New combined process for stock control

Run

SNP

Customer

Service

Demand

Planning

Stocks Central

Run

MRP

Plnd. Ind. Rqts Sales

Orders

Planned Orders

Stocks External

Conversion

to STO’s in

ME21n Transfer Reqs

Delivery

Processing Conversion

to Prd. ords

Process – 3 times daily

Run

MRP

Plan

Production

Planned Orders

ME21N

Alert Monitor

Run

SNP

Stock Transport

Orders

Transfer

Requisitions

Alerts

Planning Book

Production Orders

Material Requirements

05:00

05:30

10:00

10:30

14:00

14:30

Our Supply chain today

Transport Load Builder

• We also took advantage of TLB to assist in the planning of loads

• We have a profile set up for a standard load (28 pallets)

• We then show the requirements and each pallet takes up a floor spot, utilising one of the 28 pallets spaces

• This allows stock control to easily plan mixed loads

Production Planning Detailed Scheduling (PPDS)

Situation

• Production Plan created by Planning – Only using machine capacity

– All lines available 24/7

– No visibility of changeovers ( although built into routing)

• Timeline created by Production – Next 36 hours

– Adapted for number of crews

– Orders and changeovers visible

PPDS

• Set- up matrix defined and built using classification data extracted from ERP

• Verified and extracted data from routings and BOMS

• Defined the capacities for machine and labour

• Currently running in parallel – Go live end of November

Benefits Delivered • DP

• increase in forecast accuracy ( between 9 and 10% points)

• One version of the truth

• Promotions now being captured

• Single point of entry

• SNP • 30 %Reduction in number of vehicle movements

• Loading bay congestion alleviated

• Protected Customer Service levels through peak period

Implementation Approach

• PRINCIPLES:

1. ESTABLISH A ROBUST PROCESS

2. KEEP IT LEAN

3. MAKE IT AGILE

4. MAXIMISE SKILLS TRANSFER

• METHODOLGY:

1. WORKSHOPS WITH BUSINESS TO SCOPE

2. BUILD POC

3. PLAYBACK TO BUSINESS

4. UAT TESTING

5. GO- LIVE & SUPPORT

Process Before Technology

NO PROCESS/NO SYSTEM Our Partner insisted we have a robust business process owned and trusted by the business user, stakeholders and consumers of the demand planning output.

Prepare for New Cycle

Release to MRP

Cleanse Sales History

Execute Statistical Forecasts

Manage Exceptions

Consensus Plan Finalise Plan

DP Process

What made our Project a success ??

• We delivered on time and within budget

• Partner

• Spending time in planning phase

• Executive sponsorship

• Tight scope

• Re-iterative approach

• Good knowledge transfer throughout

• Strong internal team

Key Messages

• SCM (APO) is not as daunting as portrayed

• It doesn’t have to take forever

• It doesn’t need to cost the earth

• Keep it simple

• Short sharp projects worked best for us

• Which parts of the supply chain need improvement?

• Think of SCM as a toolbox

Questions