VAASAN Group rises to the challenge of fluctuating demand

Optimising production planning with IBM and Invenco

Published on 01-Oct-2012

"When the market situation changes, the solution gives our sales and production teams an excellent understanding of changing demand patterns. We could not have predicted this kind of growth in our Swedish sales without the new demand forecasting solution." - Nina Tuomikangas, Development Director, VAASAN Oy

Customer:
VAASAN Group

Industry:
Consumer Products

Deployment country:
Finland

Solution:
BA - Business Analytics, BA - Business Intelligence, BA - Performance Management, BA - Risk Analytics, Big Data & Analytics, Big Data & Analytics: Operations/Fraud/Threats, Business Integration, Business Performance Transformation

Smarter Planet:
Smarter Food

IBM Business Partner:
Invenco Oy

Overview

The VAASAN Group is one of the leading bakery operators in Northern Europe, producing a number of fresh bakery goods, bake-off products, and crisp-breads for sale in retail chains, restaurants and hotels. The group’s Nordic subsidiaries include VAASAN Oy in Finland, VAASAN Sverige AB, and VAASAN Norge AS. In addition to a significant share of its home markets in Finland and the Baltic region, the group is also one of the largest thin crisp and crisp-bread producers in the world. In 2011, VAASAN Group employed around 2,730 people, and achieved net sales of approximately €408 million.

Business need:
Leading Nordic bakery operator VAASAN Group wanted to improve its ability to deliver products to customers on time by developing the ability to respond rapidly to customer demand, and to adjust production and delivery schedules accordingly.

Solution:
VAASAN engaged IBM Business Partner Invenco Oy to develop a demand planning solution based on its existing IBM® Cognos® Planning software – enabling the identification of trends in customer demand through a rolling forecast.

Benefits:
Enables rapid and effective response to sudden market changes – for example, the company was able to react quickly to a 30 percent increase in sales in Sweden. Helps to achieve an on-time delivery target of 98.5 percent. Reduces business risk by keeping raw materials, human resources and production schedules aligned with customer demand.

Case Study

To read a Finnish version of this case study, click here.

The VAASAN Group is one of the leading bakery operators in Northern Europe, producing a number of fresh bakery goods, bake-off products, and crisp-breads for sale in retail chains, restaurants and hotels. The group’s Nordic subsidiaries include VAASAN Oy in Finland, VAASAN Sverige AB, and VAASAN Norge AS. In addition to a significant share of its home markets in Finland and the Baltic region, the group is also one of the largest thin crisp and crisp-bread producers in the world. In 2011, VAASAN Group employed around 2,730 people, and achieved net sales of approximately €408 million.

The need for demand forecasting
VAASAN Group wanted to ensure that it could deliver the right products to the right customers in a timely manner across the Nordic region. To achieve this, the company needed to gain the ability to predict and respond rapidly to customer demand, and adjust production and delivery schedules accordingly.

“In the food industry, it is extremely important to meet delivery schedules,” says Nina Tuomikangas, Development Director at VAASAN Oy. “We aim for an on-time delivery rate of at least 98.5 percent. To achieve this, we need to ensure that we can reserve the right capacity of raw materials and human resources to meet our delivery deadlines.”

Increasing standardisation
In the past, the group’s subsidiaries in Sweden, Norway and Finland used different methods to predict customer demand. For example, in Sweden, the production function was responsible for demand forecasting, whilst in Finland, the production function and sales team shared the role.

Without a standardised process to predict fluctuations in customer demand, VAASAN faced a business risk. There was a possibility that the company would be unable to ramp up its production in time to meet unexpectedly large orders. To gain the agility it needed to respond to customer orders, VAASAN Oy started a demand planning project.

“Our goal was to standardise demand forecasting across the group, and better organise our production processes,” says Nina Tuomikangas. “We wanted to empower our sales managers with the tools they needed to take on this role successfully.”

Transforming demand planning processes
VAASAN Oy decided to create a solution for demand planning that would collect, combine and analyse data from multiple sources – including the company’s ERP system and data warehouse – as well as expert opinions from its sales analysts and even its customers.

The solution would be built by extending the company’s use of IBM Business Analytics software, which it had already been using for several years to handle processes such as budgeting and financial consolidations. Leveraging these existing tools would not only avoid the need to invest in new software, but would also save time and effort on training, since many of VAASAN’s sales teams were already experienced users of the software.

VAASAN Oy engaged its trusted partner Invenco Oy to help build the solution, which involved setting up sophisticated demand forecasting models in IBM Cognos Planning, and implementing IBM Cognos Data Manager.

Nina Tuomikangas comments: “Invenco was an excellent partner. Their team was professional, flexible, and listened carefully to our requirements. As a result, the solution has been customised to meet our business needs.”

Getting future insight
By combining the analysis of historical sales data with the predictions of expert analysts, the solution identifies trends in customer demand and generates a rolling forecast. This enables the group to predict its raw materials requirements and adjust workforce planning and production scheduling to prepare for any anticipated rise in customer orders.

By planning and executing production processes in advance, VAASAN Oy ensures that its capacity utilisation is as high as possible – increasing efficiency, and minimising the business risk of over- or under-production.

Responding to rapid business growth
The group’s subsidiaries in Finland and Sweden are already benefiting from the solution, and it will shortly be rolled out to the company’s Norwegian subsidiary as well. The demand forecasts are now used across all levels of the business – from sales directors to warehouse managers.

“The demand planning project has been a superb success,” says Nina Tuomikangas. “A few months after we rolled out the solution in Sweden, it was really put to the test.”

Over the summer, VAASAN Sverige AB won new customers and increased the range of products available to consumers. The VAASAN team knew that this would mean an increase in sales – but unless it could predict the new level of demand, there was a risk that it would not be able to deliver the new orders on time.

Working with new customers meant that VAASAN products would be stocked and sold at a large number of stores across Sweden. The VAASAN team worked closely with its customers to gain insight into the size, location and sales history of these stores, and used the demand forecasting solution to integrate this new data into its existing demand planning model. By running historical sales data through this updated planning model, the solution was able to make a prediction of the total sales volumes at each of the new customer’s outlets.

The predictions generated by the solution gave VAASAN enough time to plan ahead and adjust the manufacturing schedule at its bakeries – significantly increasing the daily production volume. As a result, VAASAN was able to manufacture and deliver sufficient quantities of its products to meet a 30 percent increase in demand – an outcome that enabled the company to meet the needs of the customer and strengthen its new business relationship.

“When the market situation changes, the solution gives our sales and production teams an excellent understanding of changing demand patterns,” says Nina Tuomikangas. “We could not have predicted this kind of growth in our Swedish sales without the new demand forecasting solution.”

Products and services used

IBM products and services that were used in this case study.

Software:
Cognos Controller, Cognos Business Intelligence, Cognos Data Manager, Cognos Planning

Legal Information

© Copyright IBM Corporation 2012 Oy International Business Machines Ab PL 265 00101 Helsinki Finland Produced in Finland September 2012 IBM, the IBM logo, ibm.com, Let’s Build A Smarter Planet, Smarter Planet, the planet icons and Cognos are trademarks of International Business Machines Corporation, registered in many jurisdictions worldwide. A current list of other IBM trademarks is available on the Web at “Copyright and trademark information” at: ibm.com/legal/copytrade.shtml. IBM and Invenco are separate companies and each is responsible for its own products. Neither IBM nor Invenco makes any warranties, express or implied, concerning the other’s products. References in this publication to IBM products, programs or services do not imply that IBM intends to make these available in all countries in which IBM operates. Any reference to an IBM product, program or service is not intended to imply that only IBM’s product, program or service may be used. Any functionally equivalent product, program or service may be used instead. All customer examples cited represent how some customers have used IBM products and the results they may have achieved. Actual environmental costs and performance characteristics will vary depending on individual customer configurations and conditions. IBM hardware products are manufactured from new parts, or new and used parts. In some cases, the hardware product may not be new and may have been previously installed. Regardless, IBM warranty terms apply. This publication is for general guidance only. Photographs may show design models.