Hero

An End-to-End Supply Chain Planning Case Study

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Highlights
  • SO99+ creates a highly reliable demand plan for perishable, highly promoted dairy products
  • Thousands of promotions per year cause demand peaks that can exceed many times baseline sales
  • Machine learning technology translates historical data into reliable estimates of future promotions

Project and Objectives

With more than 1100 SKUs, Hero España had a wide range of products on the market, ranging from infant foods (milks, baby food, cereal, etc.) to jams, juices, dietary and hospital products. These products were stocked by more than 1000 customers at 7000 points of sale.

They faced the significant challenge of achieving a sustained and substantial improvement in its supply chain KPIs. The focus was on targets for product availability, average stock levels and forecast accuracy established by their parent company, the Hero Group.

This challenge was not completely new to Hero España. The Operating Department had already implemented a series of internal mechanisms resulting in a reduction in inventory levels without reducing the high service levels demanded by the market. Now new targets required the organization to go a step further.

According to Felipe M. Mercader, Director of Procurement and Logistics at Hero España, "In order to meet the business objectives set by head office, we not only had to redesign the company's S&OP process internally, but we also had to adopt advanced planning technology that would support and automate the process, and guarantee service."

Therefore, from the outset the objectives of the project involved end-to-end automation of supply chain planning (demand, inventory and provisioning) and achieving business goals by optimizing the balance of stock to service.

Day-to-Day

"One of the clear premises for us and conveyed to ToolsGroup was that the technology should be adapted to our processes and way of working," says José Aurelio Rosique, Logistics Manager at Hero España.

ToolsGroup’ SO99+ automatically calculates the base demand forecast at the item-channel-day level, as required by the Commercial Department. This base forecast is subsequently enhanced by adding the effect of external demand variables (promotions and product launches).

Once the Commercial Department agrees to the demand forecast, it is applied at the distribution center (DC) level to calculate inventory required to achieve the desired service level policies. Finally, guided by the target service level, SO99+ recalculates the master production plan and the restocking needs for the entire distribution network on a daily basis.

Results & Benefits

Having implemented the project with ToolsGroup, Hero has achieved a number of qualitative and quantitative improvements.

They more than fulfilled the targets set by the Group. In fact, Mr. Mercader says, "As of today, our S&OP process supported by the ToolsGroup solution makes Hero España the group's leading division in terms of forecast accuracy, inventory and service levels."

The qualitative improvements lie in the support and automation of the S&OP process. A more automated approach, supported by the SO99+ solution, has freed up resources that were previously assigned to operational tasks. These resources were instead focused on value-added analytical tasks.

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Hero was founded to provide consumers with natural, high-quality products. Today, it is an innovative and dynamic food group and a market leader in infant foods, jams and marmalades. Over time, Hero has gone from a canned and traditional foods company to an advanced nutrition company, focused on research, development and innovation. The Hero Group operates in more than 15 countries and exports its products to five continents. Within the overall group, Hero España has revenue of about $250 million.

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