When Flexso was founded in 2004, production planning was a fairly simple task. People would simply use a spreadsheet with the previous year’s sales figures to determine the appropriate levels of production for the next year. In the meantime, Flexso has become a major SAP service provider and the business world has changed radically, says Stijn Schepers, Competence Lead Digital Supply Chain.
“Production chains consist of two main parts. One of them is planning, which involves making forecasts of the company’s optimum levels of production. The other is the execution aspect, where companies have to manufacture, stock, transport, etc.”
For a long time, that planning was mostly a guesswork exercise. “Companies used to keep track of such data using spreadsheets, whereas now we use advanced planning systems. Most of our clients produce a range of different products, for which a separate forecast must be made each time. Machine learning lets us combine past sales figures with additional data, such as weather, economic trends, etc. For example, we could even include Facebook posts about a particular product in this calculation. This gives us a good overview of which products are performing best, and which are not.”
When companies are aware of what they can expect in terms of production, they can build up the necessary stocks in advance. By increasing automation, planners will have more time to do less repetitive work.
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Stijn Schepers adds that, these days, there is increased cooperation both internally and externally: “Sales people used to think their product would always be there, which could sometimes lead to problems. Companies now know that it is important to coordinate processes, not only between sales and operations teams but also with the finance department. This creates interesting roles for persons forming the bridge between those departments.”
There is still a lot more to be gained by coordinating a company’s departments. For example, Flexso works with a medical company that operates several production sites worldwide. “Until recently, they were all operating relatively independently from one another. Bringing them together under one ERP system creates a global overview and lets the company optimise its overall production levels.”
“Production planning should be coordinated not only within, but also outside the organisation,” Stijn Schepers continues. “Last year, our customer Lotus Bakeries made it clear just how important it is to make statistical forecasts and maintain good contacts with external customers and suppliers. Companies must have processes in place to quickly adjust their forecasts based on customer information. During the coronavirus pandemic, department stores experienced a surge in demand for Lotus’ speculoos biscuits, whereas airlines saw a complete drop in demand. That’s why companies should work with robust planning systems, such as SAP Integrated Business Planning, that are capable of smoothly integrating external party data.”
Another example is Miko in Turnhout. “Many of their coffee machines are located in their customers' offices. We have digitised them so that data from these appliances is integrated within SAP. This means Miko can keep track of how much coffee they need to produce. The next step would be to calculate when their appliances require preventive maintenance.”
Companies must have processes in place to quickly adjust their forecasts based on customer information.”
Less CO2 emissions
Companies never operate in isolation. They cooperate with others, but also take their place in a world that is increasingly suffering from raw material shortages and an excess of harmful emissions. Bru Textiles wanted to reduce its carbon footprint. Their textiles originate from all over the world, resulting in considerable carbon emissions. Being able to optimally predict its planned levels of production means that we can always choose the eco-friendliest option or, for example, check whether it is necessary to open a new factory elsewhere. “Nobody would have thought that a company’s carbon footprint could be reduced by using planning software,” Stijn Schepers concludes.