Canon Europe, the consumer imaging business, has gone from duplicated manually intensive processes, with multiple systems and data sources, to standard integrated processes and systems that provide advanced analytic and reporting functionality. “These support new ways of working that automate routine decisions, leaving users free to proactively resolve supply issues, resulting in a better service for customers,” says Erik Moses, who was the programme manager responsible for the project.
A subsidiary of Canon Inc of Japan, the company is headquartered in the UK and the Netherlands and has 11,000 employees. It sells and distributes cameras, printers, faxes and scanners in 18 national markets. Products are manufactured in Asia and distributed across Europe from a central warehouse and 13 regional warehouses.
The consumer imaging business has to deal with short product life-cycles and many new product introductions each year. It experiences higher demand than supply for some products and carries high inventory values.
The company use to rely on legacy systems, desktop databases and spreadsheets for planning, which was a time consuming process that was difficult to manage. “It was hard to analyse forecast accuracy and there were no statistical forecasting tools,” says Mr Moses. “Communicating supply information to customers took a lot of time and effort and was unreliable due to lack of tools and integration, so customer service was negatively impacted.”
A survey revealed that the number one priority for customers was product availability, so a more sophisticated and integrated forecasting and demand planning capability was needed. This included: standardised pan-European planning processes; more effective collaborative planning across functions and regions; automated and analytic demand and supply planning tools; and aligned performance measures and reporting. The existing enterprise resource planning (ERP) application from Oracle was extended to include advanced supply chain planning, demand planning and global order promising.
Implementation was treated as a business transformation, not an IT project. Introducing new processes, terminology and calculations across cultures and functions with varying ways of working, thinking and communicating would inevitably meet resistance. End users were therefore treated as critical customers and change was driven by clear qualitative and quantitative business benefits to ensure their commitment to a single aligned solution.
Since the system was handed over in October 2006 the business unit is now better able to create holistic supply chain plans that combine long-range aggregate forecasts with short-term scheduling. This helps ensure that the right products, in the appropriate quantities are available when needed. More efficient, collaborative and transparent planning has enabled forecast accuracy to improve by over 20 percent, which in turn contributes to optimising sales, reducing inventory and increasing customer satisfaction.
Demand planning links to sales, marketing and product management to optimise inventory and future supply through automated planning recommendations and exception-based management functionality. This has reduced inventory levels of some components by more than 10 percent per year.
End users define their own alerts and use filters to prioritise problems. They have a wide variety of analytical tools to investigate, diagnose and resolve these exceptions to the lowest detail level.
Most orders (80%) can be handled automatically and more efficiently by the system. This allows planners to focus on exceptions and take proactive actions to prevent future scheduling issues.
“Sometimes people think that when the system goes live all the benefits will suddenly appear like magic,” says Mr Moses. “It is like giving a learner driver a Ferrari. People have new terminology and a whole new integrated way of working with analytical capability and functionality. The whole end-to-end process has to work like an orchestra and it takes time for everybody to work together. We are in line with out expectations, but we will continue to improve as we get more and more experienced using the tool to optimise our supply chain.”
Critically, the company’s performance in getting products to the customer has improved. Inter warehouse transfers have also been minimised. Mr Moses points out that these are often a product of bad forecasting, with surplus product in one national market being needed in another.
Mr Moses advises starting with forecasting, as it is intuitive for end-users, drives the rest of the planning process and adds immediate value to existing planning. Improve forecasting creates a ‘domino effect’ and everything else starts falling into place.
He also warns against making the solution too complex, as users need to understand it if they are to adopt it. Finally, he advises addressing data quality issues, as advanced planning systems a very intolerant of bad data.
“We have completed a true business transformation that has broken down the barriers and introduced a sophisticated new way of working,” concludes Mr Moses. “We now have a supply chain foundation in place that gets the right products to the right place at the right time to improve customer service and reduce costs. Closer, more effective collaboration will promote future innovation and bring more value to our customers.”
