Case Atria: Forecasting and demand planning
Atria introduced RELEX systems to make its forecasting and demand planning more efficient and more accurate. With RELEX’s help Atria has managed to increase its sales forecast accuracy by six percentage points.
Atria is one of Finland’s largest suppliers of meat products and a leading food company in Russia, the Baltic states and across the Nordic region. Atria’s clients are predominantly in the grocery retail, the food service sector and food industry.
“It was clear that with the help of RELEX we could improve our planning accuracy while also streamlining our processes.”
– Jaakko Takala, Supply Chain Management Director, Atria
Challenges and goals
Supply chain management in the meat product sector is very challenging. The procurement process is inseparable from the breeding and raising of animals and lead times therefore vary from about 18 weeks to 3 years. The cost of the meat as a raw material is the main cost element of the final product. That means careful long-term planning is essential to ensure the best possible balance between the supply of meat, production and sales. As the final product’s shelf-life is short, very accurate day-by-day forecasts are essential to guide production, ensure high availability and minimize wastage. Both are equally important and have to be handled side by side.
Before Atria started working with RELEX it had custom-built systems for both short and long-term forecasting and planning.
The main forecasting-related challenges for Atria come from situations like customer-led promotions, big retailers’ buying decisions, product launches and seasonal demand forecasting. High-level planning was also complicated by foodservice customers that sometimes generated very high, often seasonally-related, demand peaks.
Atria set the following goals for improving the efficiency of its forecasting process:
- Combining short-term and long-term forecasting in the same uniform process and implement them in the same system.
- Making the forecasting more efficient using quantitative forecasting models.
- Better support systems for managing and analysing campaigns, customer assortment decisions and seasonal volumes.
RELEX solution and implementation
Having looked at several options, Atria chose RELEX, describing the decision: “RELEX’s forecasting solution met our needs precisely,” says Atria’s director of supply chain management, Jaakko Takala. “We were especially pleased that the system offered a complete suite of tools with well thought out, well-tested and intuitive workflows for both forecasting the base demand and managing special situations. It was clear that with the help of RELEX we could improve our planning accuracy while also streamlining our processes.”
Using RELEX’s statistical forecasting models, Atria has been able to bring forecasting down to a customer-chain level, at the same time taking into account variations in delivery volumes on different days of the week. The forecasts are continually calculated on a customer chain-product level looking 18 months ahead. By consolidating the forecasts at a planning-group level it is possible to produce data for long-term raw-materials planning. Takala comments: “Even the base demand forecasts produced by the system are more accurate than those that can be produced manually.”
The information about Atria’s customers’ planned campaigns and assortment was loaded directly into the system using an automatic data transfer interface. “In addition to a planning tool, by opting for RELEX we also got a data warehouse that makes it easy for us to analyse customers’ past promotions and their impact on sales,” says Takala. “And that gives us information that’s invaluable for planning future campaigns. When managing seasons having access to and being able to analyse information about customer pre-orders and the assortment at individual stores is extremely important.”
As a part of the implementation project, RELEX and Atria’s existing ERP-system, Infor M3, were integrated. After the technical implementation was carried out the planning process was moved over to the RELEX system one customer group at a time. “The implementation and integration were no big deal,” says Takala. “Personally, given my previous experience of IT projects, I was even a little surprised at how well everything went.”
Forecast accuracy increased
Volume-weighted forecast accuracy on a weekly level
Atria’s main aim was to improve its forecast accuracy. That goal has been achieved with accuracy increasing by over 6 percentage points; the volume-weighted forecast accuracy on a weekly level is over 90%.
In conjunction with the introduction of RELEX systems, Atria’s forecasting has been centralised to a skilled planning team. As a result the process has evolved and become easier to manage and develop further.
Another area of development has been the move to rolling planning, which also forms the basis of the sales budget. “Accurate forecasts on a customer-chain level will allow us to assess our performance against sales targets more quickly and to target corrective measures more effectively,” says Teemu Pitkänen, Sales Director at Atria.
Other benefits achieved:
- Forecasts are more consistent. Previously, occasional large errors in forecasts had caused problems in production planning.
- With the help of statistical forecasting models, the forecasting process has become more efficient and allows better support for the planning of customer-specific campaigns, the management of customer chains assortment decisions and planning the seasonal sales.
- Using the system, one can easily analyse the impact promotions and assortment decisions have on demand.
- Both short-term and long-term planning are based on the same forecasts and carried out in the same system.
- Using statistical forecasting frees up time for planning for special situations.