Melitta: Collaborating for an Improved Forecasting Process
Melitta is a household name for anyone who drinks coffee, but the Melitta Group’s business activities extend far beyond drip filters for your morning brew. With a revenue exceeding 1.6 billion Euros, Melitta products also include kitchen staples like aluminum foil and sandwich paper. When the COVID-19 outbreak began, the company quickly transitioned into face mask production, supplying hospitals and healthcare facilities with millions of units of coffee-filter-shaped PPE.
This adaptability has long been a strength for Melitta. Melitta Sales Europe (MSE) embarked on an initiative to revamp existing planning and forecasting processes to increase efficiency and sustainability. With over 6,700 SKUs across various brands and locations, the team needed to modernize its sales and operations planning (S&OP) process with new technology. The proprietary method that MSE had been using for demand planning was proving inadequate in the face of SKU proliferation and frequent product promotions. “Our existing technology couldn’t support our S&OP efforts”, explained Pascal Lamy, director of finance, controlling, supply chain and IT at MSE.
For MSE, the primary need fulfilled by ToolsGroup was to integrate key account and financial perspectives, enable efficient promotions management, support demand segmentation and create a flexible planning hierarchy. Another requirement was for the solution to support MSE’s collaborative planning process in which centrally created statistical demand forecasts are combined with information from local demand specialists, regional sales representatives and external partners. The tool also needed to accommodate configurable workflows and automatically detect demand exceptions or outliers.
Strengthening the S&OP Process Through Collaboration
S&OP refers to the cyclical process of aligning business activities that inform an organization’s sales and production planning. APICS defines S&OP as “a process to develop tactical plans that provide management the ability to strategically direct its businesses to achieve competitive advantage on a continuous basis by integrating customer-focused marketing plans for new and existing products with the management of the supply chain. The process brings together all the plans for the business (sales, marketing, development, manufacturing, sourcing, and financial) into one integrated set of plans.”
Interestingly, according to Gartner, S&OP has consistently ranked as a top supply chain initiative in recent years, yet many companies are still in early stages of S&OP maturity.2 Crucially, an effective cross-functional and collaborative S&OP process addresses most of companies’ top supply chain goals.
ToolsGroup supported MSE’s other key priority: seamless collaboration between stakeholders. The solution’s web-based demand collaboration hub (DCH) enables the entire team involved in the S&OP process to access relevant information.
For example, within an audit workflow multiple stakeholders across various regions can apply detailed market knowledge specific to their regions to the demand baseline forecast for a more accurate result. They can also factor in in monthly demand quantities or planned promotions.
MSE’s prioritization of its close internal collaboration strengthens the precision of its forecasts, ensuring a more robust S&OP process.
A Perfect Brew
Melitta’s strategic prioritization paid off: the company was able to standardize and centralize the collaborative planning process; integrate strategic planning and tactical operations; manage promotions more efficiently, and expand its active user base to pull insight in from other commercial departments. Ultimately, they were able to increase their statistical forecast accuracy by 3.2% (KPI: WMAPE) within six months of the French pilot project’s beginning. Read the full Melitta case study below.
2. Gartner: Keys to Solving the Top S&OP Challenges; Refreshed 29 October 2019, Published 12 June 2018. Michael Youssef