Systagenix

A Demand Forecasting Case Study

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Highlights
  • Patient care required at least 98 percent service levels, and therefore accurate forecasting
  • SAP APO causing too much time-consuming data manipulation
  • Achieved significant improvements in forecast accuracy, inventory turns and level of effort

Project and Objectives

Wound care products manufacturer Systagenix faced a challenging supply chain. Products were distributed to 100 countries via six regional 3PLs. Despite demand variation, patient care required at least 98 percent service levels, and therefore accurate forecasting. And customers preferred products early in their shelf life, requiring lean inventories.

Unfortunately Systagenix found their SAP Advanced Planner and Optimizer (APO) system required too much time-consuming data manipulation to generate a reasonable forecast. It also reduced the time available to work with commercial teams to refine and enhance the forecasts.

Supply Chain General Manager, Alastair Mitchell, described the situation, “Given the diversity of our global sales channels and APO customization that was necessary, we were dedicating significant time and expense to adapt the system to our needs and repeat the process every time we needed further changes. This wasn’t really a viable option given the dynamic nature of our global business and pace of innovation.”

After evaluating their SAP APO system, Systagenix set out to find a more user friendly, low touch tool that could deliver a stable, accurate forecast and optimized safety stock levels. Mitchell summarized, “I really set out looking for a forecasting tool that would free up my team from having to engage in non-value-added transactional work.”

Day-to-Day

After evaluating six alternatives, Systagenix selected ToolsGroup’s SO99+. Following a successful seven month pilot, Systagenix went live with the hosted SaaS version of the ToolsGroup software in July 2013. The system forecasts SKU level demand by individual market and then calculates safety stock targets at six 3PL stocking locations across the global supply chain for all 300+ SKUs.

SO99+ extracts data from Systagenix’s SAP ERP system to automatically calculate a demand forecast. Next, the forecasts are refined further with input from the commercial team before finally being used to calculate optimized safety stocks based on target service levels. Finally, the forecast and these dynamic safety stocks are loaded back into the ERP system, which then executes the planned replenishment actions.

Adds Mitchell, “SO99+ has a unique ability to factor in the demand variability at the order-line level in order to optimize our safety stocks.”

Results & Benefits

With SO99+ live, Systagenix is starting to measure some impressive results. Despite targeting higher 99 percent service levels at their 3PL distribution sites, inventory levels have been reduced by up to 15 percent. On this measure alone, Systagenix calculates that the ToolsGroup investment will have paid off in the same year as implementation, allowing them to invest in other areas to maximize global service levels.

The monthly global forecast that used to take the two people an entire week now can be accomplished by one full-time person in a single day. This forecaster’s remaining time is also used much more productively and satisfyingly, to refine the forecasts with input from the commercial team. The second forecaster now supports another part of the business.

Systagenix is planning further improvements, such as moving from monthly to weekly forecasts. Notes Mitchell, “We found the ToolsGroup people very easy to work with, responsive and knowledgeable. Our relationship worked well in an understated, low-pressure way. In that respect, they are kind of unique in the enterprise software world!”

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Established in 2008 following the acquisition of Johnson & Johnson’s professional wound care business, Systagenix is a global leader in innovative wound care. It offers a full range of dressings and therapeutic devices for healing severe wounds and preventing them from leading to more serious consequences. Systagenix globally supplies more than 20 million advanced wound dressings per month and distributes their products and services to more than 100 countries. They are in the process of being acquired by Kinetics Concepts Inc. (KCI) - which will create the world’s largest wound care company.

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