CHALLENGES:
Inconsistent demand planning hurt profitability
This company’s demand planning processes required the cooperation of employees across North America, Latin America, EMEA, and APAC. Unfortunately, planning remained mostly manual, with significant use of Excel spreadsheets and by-hand data updates. This made statistical demand forecasts both time-consuming to generate and inaccurate once generated. Because of these cumbersome processes, nearly half of all forecast numbers required manual adjustment, and because of these inaccurate numbers, the company wasted millions of dollars every quarter producing “safety stock.”
The company understood they needed a better planning system, but with no effective, scalable, and cost-effective solution currently in place, regional teams had established their own individual processes. To implement a single system that would bring consistency and efficiency to their planning, the company turned to Spaulding Ridge.
SOLUTION:
A more accurate, more automated, more unified forecasting process
We began our work focused on a single business unit within the company, with several goals:
- Deliver a more accurate forecast than the company’s current statistical tools currently provided. In 2024, prior to our work, the company’s demand planning forecast commonly produced a variance per region from 20 percent to 60 percent, substantially increasing the amount of work required to generate a consensus forecast and leading to increased spend due to safety stock production. We aimed to beat that number in the first 2025 forecast.
- Establish a single, unified planning process the entire company could follow. The company managed four siloed planning processes, with significant use of Excel throughout. We determined that our final process would eliminate Excel and would be a template for the entire company’s planning.
- Reduce manual forecast adjustments save time among planning teams. When our partnership began, the company needed to manually adjust approximately 40 percent of its forecast results. We committed to reducing that number by half, allowing planners to spend more time on value-add activities.
Spaulding Ridge first established a global Center of Excellence (COE) that would standardize planning processes across the company, sharing best practices amongst the regions involved in planning. Our global project delivery team worked directly with on-the-ground stakeholders in the company’s regions, allowing us to understand what factors planning needed to adjust for each business unit and region.
The COE gave us a process through which offline planning approaches could be centralized in a single cloud-based planning tool. We recommended the company switch to planning by exception instead of planning for everything, which allowed them to save time and focus their efforts.
We used Anaplan PlanIQ in addition to our proprietary best fit logic and Anaplan algorithms to create a test forecast for a small set of products as a proof-of-concept. When this forecast outperformed the company’s existing forecasting logic, we then expanded to the entire business unit, establishing a forecasting process that would shape its entire production strategy.
AFTER:
A more accurate demand planning system projected to save millions of dollars
While we hoped the Anaplan/PlanIQ forecasting system would outperform the company’s current statistical tools, our work exceeded expectations. Not only did the system improve on the legacy system’s accuracy by over 30 percent—it also beat the company’s adjusted consensus forecast. The company can now be confident in the accuracy of its forecasting numbers, allowing them to significantly reducing manual work spent adjusting forecasts. Ultimately, more accurate numbers are projected to save the company more than $10M per year in safety stock reduction. As a result of this implementation, the company plans to expand this forecasting system to other business units, further standardizing its planning strategy and gaining additional efficiency.
