Sales and operations planning sees big wins at Consupaq
Consupaq, South Africa’s leading manufacturer of plastics for the personal care and pharmaceutical industries, found that their ERP systems were data-focused and therefore unable to drive behavioral change that could positively affect customer satisfaction. To this end, the organization implemented Sales and Operations Planning as a way to shorten lead times. The implementation quickly saw wins across various metrics including lead times, stock turn days, inventory, throughput, On Time In Full (OTIF), and Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA).
- Lead time reduced by 44%
- Stock turn days reduced by 55%
- Inventory on green stream products reduced by 20%
- On Time In Full (OTIF) to more than 96%
- Daily throughput on constraint machine increased by significant improvements in EBITDA during the measurement period 100%
Prior to the implementation of Sales and Operations Planning (S&OP), Consupaq teams worked in silos with very little understanding of their impact on the greater supply chain, which in turn led to a limited understanding of their impact on customer service. The company had already implemented ERP systems successfully to manage the planning flow. However, these systems addressed data and did not drive changes in employees’ behavior.
Lead time commitments to customers were not competitive in the market — it would take over nine weeks to deliver on the largest pieces of equipment. Stock turn days were excessive with high inventory levels on make- to-stock products. No strategic inventory management policies were in place, leading to incorrect product stocks being held. Work in process inventory levels were also high, with stocks of semifinished goods waiting around, even where no finished goods had been planned for that month. Furthermore, there was little flexibility to respond to urgent orders from key customers, which created increased frustration for the sales team.
The site scored a maturity level of 2.5 on their TRACC Foundation Practices, however, Profit Improvement Projects (PIPs) were targeting losses related to operating costs, and not those related to customer service losses.
At the S&OP workshop the following key objectives were identified:
- Reduce lead times by 50%
- Reduce stock turn days by 40%
- Reduce total stock value
- Improve OTIF to more than 96%
An initial S&OP training workshop was scheduled to ensure that all team members understood the following:
- The relevant planning theory and the application thereof
- The Consupaq planning environment and its challenges
- Potential opportunities and the identification of quick wins
- Defined key objectives for the implementation
Two planning approaches were identified as beneficial to Consupaq — the Glenday Sieve analysis technique and the Theory of Constraints.
The Glenday Sieve approach, a filtering tool that assists in prioritizing improvements, was applied to all make- to-stock items where stockholding was a customer requirement. This was to support the stock turn day and inventory level objectives set:
- Data was collected and analyzed to support the implementation of the agreed planning strategies
- Stock levels were illustrated graphically over time and strategic stock levels agreed
- Stock replenish policies were agreed and documented
- Stock levels were then managed on a weekly basis
The Theory of Constraints was applied to the main constraint machine with the longest lead times. This would support the lead time objectives set. The process was as follows:
- A process mapping exercise was conducted on the constraint machine to identify where time was being wasted
- Data was then collected and analyzed to support the implementation of the planning strategies agreed
- Focus of WCM practices was shifted to the constraint machine to increase daily throughput
In order to sustain these planning best practices the following was also implemented:
- Weekly planning meetings
- Consupaq Online data system providing a visual reporting tool using real-time data including:
- inventory levels for green stream products
- raw material forecasting
- machine loading and constraints
- Planning policies were documented and agreed
This implementation translated into the following tangible results based on key objectives:
- 44% reduction in lead time
- 55% reduction in stock turn days
- 20% reduction in inventory on green stream products
- OTIF to more than 96%
Additional tangible results achieved included the following:
- 100% increase in daily throughput on constraint machine due to increased focus
- Significant improvements in EBITDA during the measurement period
Intangible results included the following:
- Better understanding of the Consupaq business by all team members
- Development of Consupaq Online, a real-time information system
- Increased involvement of all team members in business decisions
- Alignment and congruency of thinking by the Supply Chain team
Said Robin Rigney, General Manager of Consupaq, ”Moving from foundation practices to Sales and Operations Planning was a major step. For senior managers, the tangible benefits became clearer, e.g., inventory and lead time reduction, and S&OP has enabled them to chase performance in a meaningful manner.”
Consupaq is South Africa’s leading manufacturer of plastic jars, containers and tubes for the personal care and pharmaceutical industries. As such, the company holds numerous patents. Their generic product range includes injection-molded jars, thick-walled cosmetic jars and a full range of monolayer and multilayer polyethylene tubes.
Entrepreneurial drive, innovative products, listening-based customer service and a dedicated, strong team have been key to the company’s success. Consupaq is situated in Durban, KwaZulu-Natal and became part of the Astrapak Group in September 2005.
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