Reflections from the 2015 AMERICAS Spring SAP Inventory Optimization User Group

[DKahn]

Thank you to the Pfizer team for hosting so many SAP Inventory Optimization customers at the 2015 Americas Spring Inventory Optimization User Group meeting.  Thank you to Thomas Oberhauser from PPG for continuing to carry the torch forward for this great group of Supply Chain Executive Leaders.

We all enjoyed seeing old friends from PPG, Johnson & Johnson, Estee Lauder, Medtronic, Kohler, Pfizer, ConAgra, Perrigo, and Molex.

We all welcoming the new members to the community from Kimberly Clark and Natura.

What did SAP Inventory Optimization customers say?

“Great discussion and a lot of learning.”

“I love this forum as it is the only group where we candidly discuss topics that effect our every day jobs in managing Inventory and Customer Service and share our learning and best practices. I cannot find that anywhere else in the world."

“It was great meeting you all too, we definitely have learned a lot.”

“The EIS user group is an excellent place to express free flow thinking and generate synergy around complex solutions to inventory optimization.” Sean Smith, Estee Lauder

Highlights:

John Lopus, Head of SAP Supply Chain Planning Consulting Services, enlightened the attendees on the nuances of service time, frozen periods, and raw material modeling techniques.

PPG Data Validation

Key Learnings:

• Clean your data early and often.
• Make sure to have tight data validation to ensure a representative analysis

Johnson & Johnson Segmentation Approach

William Blair, Director, Supply Chain, Johnson & Johnson

Key Learnings:

• Focus on total inventory vs. just safety stock
• Match incentives to EIS project goals
• Help business understand inventory levers driving outputs
• Leverage EIS to have intelligent conversations around inventory drivers and achieving customer service levels.
• Scientifically segment SKUs based on risk and reward.  Consider Demand Variability, Bias performance, “Rhythm Time” (MOQ coverage), Lead Time, Lead Time Variability, and Historical Unit Fill Rate Performance.

Pfizer:

The Role Based discussion using the Car analogy lives on:

Jerry Saltzman, Director, Global Supply Chain Planning, Pfizer

“Be conscious of who is in the car, what they are thinking, and how you can all get to the right place for the company without killing each other.”

Pfizer Change Management approach is not for the faint of heart.

Key Learnings:

• Business Case for change in short segments. - 5 minute videos
• You are in a marketing role to make the change
• Change your message depending on who you are talking to:
  • Finance wants to hear about inventory reduction
  • Sales and Supply Chain Planners want to hear about customer service level improvements.

Welcome Natura, who Discussed their Challenging Business Scenarios

Natura is the largest distributor of beauty care products in Brazil. They have over one million sales people who sell and distribute product from their homes, they have a high target service level and strive for lower inventory levels.

They have 18 magazines per year. Every 21 days the prices, promotions. ie. 18 planning cycles.

Promotions can increase volumes 2000%. Sellers can purchase promotion products in advance.  They have 1 hub, 8 DCs, and 180 transit points for distribution.

They see the main gain of using EIS is the ability to reset their inventory levels based on a multi-stage internal service level analysis.

They are just starting their implementation and have estimated that they will be able to cut their safety stock significantly.

Fun Evening Dinner and Stanley Cup Playoffs

Everyone is looking forward to getting together in the Fall in Pittsburgh for the next User Group meeting.