Introduction
Vestel – an ICRON customer for almost 20 years – is one of Europe’s manufacturing giants, specializing in producing consumer electronics, mobile technologies, displays and LED lighting, and household and professional appliances.
In 2011, Vestel decided that it needed an integrated sales and operations planning (S&OP) solution, as the manufacturer’s supply chain had become too complex – involving too many products, components, constraints, and constantly changing demand signals – to handle. For this S&OP solution, they turned to ICRON.
The Problem
Here are some of the key challenges Vestel was facing due to the complexities of its supply chain:
Vestel possesses a wide, diverse product portfolio that changes continually, along with the latest technological advancements and market trends.
Vestel offers a wide range of customization options to cater to customer demands in terms of order quantity, due date, and product specifications.
Vestel needed to implement a robust S&OP solution that enabled ongoing responsiveness and seamless collaboration between its Sales & Marketing, Procurement, Manufacturing, and R&D departments.
Vestel is located far away from its network of suppliers, which are primarily based in Asia.
Vestel must manage long lead times in material procurement and engender greater integration and flexibility in its S&OP process, to balance supply and demand and reduce costs in this globalized business landscape.
Vestel executed the S&OP process utilizing numerous interlinked Excel spreadsheets and data extracted from SAP, the company’s enterprise resource planning (ERP) system.
Vestel’s planning team spent over one year trying to develop their own heuristics-based system to solve these challenges, but they were not successful. To overcome the complexity of their business challenges, Vestel’s planners required an automated, optimization-based solution.
They needed an algorithmic planning system that would enable the company to gain greater visibility and flexibility across its supply chain, foster increased integration and collaboration throughout its operations, and boost its overall productivity and profitability.
Solution
To help Vestel attain a highly flexible, integrated, and automated S&OP process, ICRON’s S&OP solution – using Gurobi’s mathematical programming solver as its optimization engine was implemented in 2011 with some customer-specific modeling. ICRON’s solution, which was developed, tested, and integrated with Vestel’s existing ERP system, was implemented over the course of six months and became immediately fully operational.
The new ICRON system revolutionized and optimized Vestel’s S&OP process and empowered its planners by equiping them with enhanced supply chain visibility and the capability to:
Rapidly generate optimal plans that satisfy sales forecasts and customer demands, minimize production and procurement costs, and meet operational constraints.
Determine inconsistencies between sales forecasts, realized customer orders, supply constraints, R&D plans, and managerial goals.
Choose among alternative plans that can satisfy given goals and constraints to increase operational efficiency and reduce costs.
Perform scenario analysis on forecasts, procurement capability, and production capacity.
Revise plans automatically to align with realized customer orders and resolve supply and demand imbalances.
Archive and compare previous plans to facilitate the analysis of discrepancies between forecasts and realized customer orders.
Develop enhanced data models that enable integration with Vestel’s ERP and other data sources.
Results
Vestel’s implementation of ICRON’s S&OP solution system and the Gurobi Optimizer delivered:
Increased efficiency in the S&OP process: ICRON reduced the synchronization time between Vestel’s sales and operations from two weeks to one day.
Greater visibility and control across the supply chain: Vestel’s planning experts are able to present up-to-date and accurate data to all stakeholders in a unified and consistent format.
20% improvement in planning accuracy
50% reduction in planning time: With ICRON, Vestel has been able to cut its planning time by more than 50%, thus significantly increasing its agility by improving its ability to respond to unforeseen changes in demand, supply, or market conditions.
5% reduction in inventory levels: ICRON has enabled Vestel to decrease its inventory levels – for the materials controlled by the ICRON platform – by 5%.
