Barry Callebaut integrates S&OP into the daily process
“Involvement of the C-level is an important step in successfully integrating sales & operations planning into day-to-day business processes,” says Tom Declercq, supply chain director of Western Europe at Barry Callebaut, during his presentation at the Supply Chain Innovations event in Lint, Belgium, on 27 March. With a sales volume of 1.5 million tonnes and an annual turnover of four billion euro, the Swiss chocolate manufacturer offers its customers a broad spectrum of services relating to product development, processing, training and marketing.
By Sohrab Hosseinzadeh, supply chain correspondent
Up until the end of 2012, there was no link between sales and operations within the Barry Callebaut group: each production facility was consulted separately, forecasts were adjusted by the planning department, and C-level management was not involved in the process. “It’s quite a complex industry when it comes to implementing change,” states Declercq. The company has 50 manufacturing sites around the world, and the current sales & operations planning (S&OP) project encompasses 13 production facilities and nine distribution centres. The cost of unutilised capacity is extremely high, plus the organisation faces long lead times for capacity adjustments.
The aim of the S&OP project is to create more transparency and achieve a better balance in both the long and the short term, for sales and operations in response to customers (demand side) and the purchase of raw materials (supply side). As the foundation for this, Barry Callebaut is using a single dataset for sales, operations, finance and planning with clearly defined responsibilities for each department. That dataset should make it easy to see which agreements have been made for supply-side and demand-side processes, and serves as input for both the order promising process and the procurement and budget planning.
Declercq explains that Barry Callebaut has made the demand planners responsible for the process, and the sales department for accurate demand forecasts, by linking their bonuses to performance. The forecast is discussed with the vice president of sales each month, and if there are major discrepancies an action plan is set up for gap-closing projects. S&OP has likewise become a central item on the supply department’s agenda. Furthermore, scenario planning methods are applied in order to improve the balance between sales and operations, and all relevant managers are involved in the S&OP meetings. S&OP is now top of the agenda at the monthly C-level meetings. “At S&OP meetings, it’s best to focus on long-term decisions and preparing follow-up action plans,” says Declercq.
With these implementations, Barry Callebaut has achieved accurate coverage with an 18-month horizon thanks to sales employees paying more attention to demand forecasting. Additionally the team can now present a single, complete plan for both sales and operations. The operations department is now able to evaluate scenarios for capacity investments more effectively. The planning department considers the long-term planning more frequently, decisions can be made more quickly, and the impact of it all becomes apparent sooner in the business processes.