Protiviti assists major publisher in improving sales and operational planning
Address challenges like high inventory obsolescence, low fill rates/service levels, significant order backlogs and low customer satisfaction ratings.
To develop an accurate demand forecast where 60 to 70 percent of its customers order products and expect delivery from June through August.
A compressed & improved revenue forecasting cycle provided great payback. Also assisted in lowering inventory levels and improving fulfillment rates.
Our client undertook two acquisitions and several major reorganisations and cost-synergy actions, all of which introduced a high level of change into its business environment at a time of uncertain economic conditions. A decentralised demand planning process created latency in demand and supply planning and analysis, causing numerous challenges around reporting, consistency, supply planning, and ultimately, profitability. These challenges resulted in high inventory obsolescence, low fill rates/service levels, significant order backlogs and low customer satisfaction ratings.
The pain points included validating and integrating demand and supply forecasts for more than 5,000 educational programs and 200,000 individual products (textbooks, teacher manuals, etc.). Developing an accurate demand forecast is uniquely critical to this company, where 60 to 70 percent of its customers order products and expect delivery from June through August.
The company called on Protiviti to help it address these critical challenges.
In order to address our client’s issues, we formed an integrated team from our Supply Chain and Performance & Information Management solutions and incorporated a two-pronged approach.
Before we addressed the client’s technology platform, Protiviti’s experts focused on leading the client through exercises designed to establish standard practises and clear accountability. By focusing on the organisation and process, the engagement team and client were better able to adapt to and embrace the technology solution.
The approach taken by the Protiviti consultants included:
- Defining the company’s value chain – a process that helped put structure over a recently integrated company
- Defining level 2 and level 3 processes to identify gaps, overlaps and bottlenecks preventing the company from forecasting efficiently
- Performing an analytical review of forecast accuracy to establish the potential value to the organisation
- Establishing roles and responsibilities, and eliminating gaps and overlaps
- Identifying where technology could/should institutionalise knowledge, eliminate bottlenecks and streamline the process – making it more efficient and repeatable
- Implementing improved forecasting models and reporting capabilities to enable management to focus on products and geographies that matter most
The project involved a combination of capabilities, including 1) the client’s deep understanding of its capabilities and issues, and 2) Protiviti’s subject-matter expertise, broad experience and tenacity to get things done. Many involved in the process were anxious about new or changing responsibilities and the potential for automation. Being part of the solution and having a voice along the way led to smooth transitions between various project stages and solid momentum during rollout and implementation.
As a result of Protiviti spotlighting the amount of money being spent to work with outdated forecasting processes and data, our client discovered how a compressed and improved revenue forecasting cycle would provide an extremely high payback. In fact, just two months of inventory carrying costs – which typically were accrued from interest, warehousing and handling outlays – paid for the project.
Our experts assisted the company in lowering inventory levels and improving fulfillment rates, thereby increasing customer satisfaction levels. Specifically, as a result of this engagement, we helped our client:
- Decrease revenue forecast cycle time from several weeks to several days, which improved demand forecast through more frequent versions.
- Improve forecast accuracy by 10 to 15 percent, resulting in millions of dollars of cost savings by lowering inventory obsolescence by 1 percent of sales.
- Avoid untimely or unneeded purchases amounting to tens of millions of dollars.
- Reduce excess inventory carrying costs by an estimated US$500,000 per month.
- Improve customer fill rates from 70 to 85 percent, resulting in improved customer satisfaction.
- Decrease on-hand inventory by 8 percent in a year during which sales increased by 10 percent.
- Decrease incoming call volume (customers with issues) by 23 percent.
How We Help Companies Succeed
Our Performance & Information Management services embed insight into operations to drive business strategy and performance, transforming data into information for increased business decision support.
Protiviti helps organisations provide strategic insights to the enterprise, including the design and implementation of leading-edge budgeting and planning practises, development and alignment of key metrics through business intelligence or balanced scorecards, and strategies, processes and technology for continuously monitoring business performance and the effectiveness of governance over data, information, intelligence and insights.