We worked with this chemical company to perform an end-to-end diagnostics of their S&OP process. This client was going through the motions of an S&OP process, although the meeting was very thinly attended and there were often forecast and supply conflicts.

The process was characterized by both inaccurate demand plans and high levels of inventory. Despite inventory, the customer orders were not delivered on time. Although they knew forecasts were wrong, they did not have a measurement process to calculate the true forecast error.

Demand Planning, LLC studied their demand and supply chain process to compile a diagnostic of their end-to-end process from demand forecasting to order fulfillment.

• We highlighted the problems with inaccurate measurement of their supply chain in a key area – customer service. We corrected this measure to capture the true on time delivery using a spreadsheet pilot for a particular group of materials.
• This pilot helped them understand their potential lost sales from poor customer service despite high inventory levels.
• We illustrated the link between forecast error and inventories and customer service with a calculation of the inventory dollar cost of one point forecast error.