A medium-sized company for cleaning products and personal care with private labels was in the final phase of a restructuring project. The interim manager was hired to support the operational management of supply chain management and optimize the supply chain processes due to significant problems with delivery reliability and customer satisfaction.
Sales & Operations Planning identified as the main cause of delivery problems
When the interim manager began the mandate, the situation was characterized by below-average customer delivery service and high and incorrect finished goods inventories. The interim manager quickly realized that the poor availability of goods was primarily caused by an inefficient sales planning process. Although basic S&OP processes had been introduced, they were not consistently adhered to and were not used to manage production capacities and inventories in the medium and long term.
Four fields of action for process optimization defined and projects set up
In order to remedy these shortcomings, the interim manager defined four fields of action together with the specialist departments and the COO:
- Improving data quality in the ERP system (SAP R/3)
- Optimizing business processes for S&OP with SAP IBP
- Introducing the "Demand Plan Accuracy" KPI for planning and sales
- Introducing safety stocks for top100 articles
Taskforce optimizes transaction and master data in the ERP system
The quality of the transaction and master data in the ERP system (SAP R/3) was sometimes so inadequate that customer orders had to be canceled. In addition, an unnecessary amount of resources were tied up in excessive stocks of finished goods. To remedy these deficiencies, the interim manager initiated a project to improve data quality. He put together a task force with supply chain management specialists and IT experts.
Cleaned up transaction data within a few weeks
Under the leadership of the interim manager, the team cleaned up the SAP system within a few weeks, removing the incorrect and outdated transaction data that was negatively impacting current inventories or customer orders. At the same time, the project team defined responsibilities for all data types and the necessary governance. In this way, the interim manager was able to ensure that the transaction data would remain "clean" in future. In order to firmly establish data quality in the daily management routine of the department heads, the interim manager ensured the implementation of a data quality dashboard that made progress visible on a daily basis and enabled prioritization.
Detailed project brief created to improve SAP master data
After the quality of the transaction data had been sustainably improved, quality deficiencies in the master data of the ERP system became all the more apparent. This led to the second phase of the project: the optimization of the master data. Based on an as-is analysis, the interim manager drew up a detailed project brief for improving the SAP master data and convinced the management to prioritize this sub-project in order to further increase process efficiency and use of the ERP system.
Optimization of business processes for Sales & Operations Planning
Even before the start of the mandate, the company had begun to introduce the SAP IBP module as software for Sales & Operations Planning. Thanks to his in-depth S&OP process and project expertise, the interim manager was able to actively support the IBP project in process design. Among other things, he structured the regular appointments in the S&OP process using standardized agendas and format templates. He also optimized the content and participants of the meetings. This made a significant contribution to increasing the transparency of the planning processes in the supply chain and ensuring efficient communication, which enabled clear joint decisions to be made.
In addition, the integration of system functionalities such as rule-based system messages (alerts) into the routine processes of Sales & Operations Planning meant that the workload could be significantly reduced. In another sub-project, the interim manager laid the foundation for continuous improvements in the transparency and performance of the sales planning processes with the introduction of the "Demand Plan Accuracy" KPI for sales and supply chain.
New safety stocks secure market supply
During the restructuring, the company had liquidated large quantities of safety stocks of finished goods to secure liquidity. This contributed to supply bottlenecks and the cancellation of customer orders. In order to avoid such incidents in future, the interim manager initiated a project to gradually reintroduce safety stocks, starting with the top 100 items.
He also developed a methodology based on a thorough data analysis, which he handed over to the planning department together with the working documents following user training. The proposal for the new safety stocks, which was developed together with the specialist departments, was approved for implementation by the management and then implemented.
Operative further development of the supply chain organization
In addition to the aforementioned project work, the interim manager bridged the vacancy of the full-time supply chain director. He provided active support in day-to-day operations, troubleshooting and managing the teams. Other areas of activity included the management of capacity bottlenecks, customer prioritization, the identification of potential for reducing complexity and the management of obsolete stocks.
The interim manager also focused on the structural development of the supply chain organization. He defined job descriptions for vacant positions and selected suitable external resources to further increase the level of expertise in the supply chain.
Delivery reliability increased from 55 to 88 percent in twelve months
After twelve months, the interim manager successfully completed the mandate. The optimization of the ERP system and the efficient design of the business processes now ensure that the company can plan much better. The risk of delivery bottlenecks has decreased significantly.
The optimized planning processes in combination with the improved data quality in the ERP system and the efficient coordination between the specialist departments led to an improvement in customer order fulfilment (measured as OTIF) from 55% (June 2023) to 88% (May 2024) over the course of the mandate. Just three months after the introduction, the DPA KPI had risen significantly: from 44% in January 2024 to 64% in April.
Cultural change: specialist departments understand supply chain management as a shared task
The interim manager was also able to contribute to a cultural change within the company by breaking down silo thinking. The specialist departments now see supply chain management as a process in which everyone (supply chain management, sales, production, purchasing) makes an important contribution.
