Implementing demand planning in the construction materials sector

Customer

The customer is one of the leading manufacturers of building materials. The project focuses on the production of boards, mainly (but not entirely) MTS driven.

Challenges

The current demand planning is entirely based on historical demand which is loaded in an excel-based tooling. There is no form of forecasting and the existing planning system is not used to plan production on a longer horizon.

There is no central distribution planning, but each distribution centers orders ad hoc from the central warehouse.

Solutions

The data analysis was done, evaluating the results of different statistical forecasting methods.

Next to a ‘simple’ comparison of the resulting forecasting accuracy, an analysis was also made to understand on which level the forecasting should be done. After alignment with the business, it became clear that the implementation of a central distribution planning team would not be part of the roadmap. This has triggered the analysis to compare the results of the forecasting process between forecasting the volumes dropping on the central distribution warehouse versus forecasting the demand on each of the local distribution centers.

Results

As a result, it became clear that the forecast accuracy increases by 20% if we forecast directly on the central distribution centre. This also implied a small investment, as the current planning tool had to be slightly adapted. Forecast consumption needs to be done by the combination of stock transfer orders dropping on the central distribution warehouse as well as customer orders being shipped directly.

This lead to:

• Implementation of forecast-driven production planning
• Embedded in the already-existing planning tool
• Improved visibility of the upcoming plan, visible for all stakeholders
• Improved service levels
• It forms the basis for further improvement in the demand planning process, enabling a better alignment between product management, sales and demand planning