Companies implementing supply chain planning (SCP) have traditionally been very big companies or companies with complex supply chains. Neither of the customers highlighted in this article fall into that category. Supply chain planning is not just for the big boys.
Myers Industries Implements John Galt Solutions
Myers Industries (NYSE: MYE) is headquartered in Akron, Ohio in the United States. This manufacturer produces plastic reusable material handling containers and plastic fuel tanks. They also are also one of the largest distributor in the US of tools, equipment and supplies for the tire and wheel service industry. They generated revenues of over $750 million in their last fiscal year.
The Company operates eighteen manufacturing facilities, nine distribution centers located throughout North and Central America. They source plastic pellets and then use injection, blow molding, rotational molding, and thermoforming to produce their finished products.
In September of 2020, the company hired Jeff Baker to be their Vice President of Procurement and Integrated Supply Chain. Mr. Baker spent over 34 years leading procurement teams at The Dow Chemical Company. At Dow, Mr. Baker had Purchasing experience in raw materials, and logistics for their plastics supply chain. After being hired at Myers Industries, Mr. Baker was promoted to Vice President of Shared Services and tasked with creating a centralized supply chain organization.
Getting independent business units to operate in a centralized supply chain structure would allow the company to have better leverage in procurement negotiations. But, even more importantly, it would allow Myers to build up their supply chain expertise, become more efficient, and drive asset utilization. “There was limited demand planning that tied back to our actual manufacturing capabilities,” Mr. Baker explained. That meant Myers had limited capabilities when it came to sales & operational planning (S&OP). S&OP is the key process in effectively balancing supply – what can be made – with demand – what customers want to buy.
Myers Industries ended up selecting the Atlas Planning Platform from John Galt Solutions. Mr. Baker believed that a supply chain planning solution could help drive a “consistent process across the organization” and serve as the impetus to build skilled demand and supply planning teams. The supply chain planning solution has “a work process flow to it,” Mr. Baker said. The KPIs and widgets are highly configurable, and the dashboards are “powerful.”
Myers Industries began implementing the solution in February. They have three business units live – a fourth will be up by the end of the year. They have implemented the demand solution, supply planning, and are working on rough cut capacity – a more advanced form of supply planning. The largest impediment in the implementation was that much of the master data was dirty and the process of cleaning it took time.
One business unit has already made significant progress. Based on the data from the SCP, Myers could see that there was a lot of demand that got loaded on one of their manufacturing assets. Visibility to this fact allowed Myers to move from a make-to-order to a make-to-stock process. “We were able to use alternative sources of manufacturing to increase the amount of product that we could sell,” Mr. Baker explained. That transition allowed for a higher performance in on-time deliveries and increased sales. “We are providing much better customer service, we are selling more, and we are more profitable.”
John Galt was selected because it provided robust capabilities. “You know it’s really good. Actually, it’s really exceptionally good,” Mr. Baker exclaimed. He then pulled the solution up and demonstrated it for me. It really does look good, really exceptionally good.
Palo Alto Networks Implements Anaplan
Palo Alto Networks (NASDAQ: PANW) is a public cybersecurity company with headquarters in Santa Clara, California. Its core products are a platform that includes advanced firewalls and cloud-based offerings that extend those firewalls to cover other aspects of IT security. The fast-growing company generated over $5.5 billion in revenues in the last fiscal year.
Jonathan Morgan – the Senior Director of S&OP, Demand, and Inventory Planning – explained that for a multibillion-dollar company, Palo Alto has a simple supply chain. “Our main contract manufacturing is done in Milpitas, CA – near our headquarters – by Flex.” That facility makes printed circuit boards and does final assembly. Another contract manufacturer produces much smaller volumes for a different business unit in Fremont, CA. “The two contract manufacturers also store the finished goods and then do the shipping.”
Before selecting and implementing Anaplan, Palo Alto used a solution from a different supply chain planning vendor. “We were coming up on time to renew that license.” Mr. Morgan said. “So, Palo Alto did a software evaluation. “We looked at our current business environment, looked at the needs, the utilization of the software, and the pricing.”
“We realized that the software we’re paying for is very expensive and robust. It is complex software made for a more complex supply chain,” Mr. Morgan said. “And the road map we had in front of us didn’t require that sort of complexity.” After looking at several vendors, Palo Alto “found that Anaplan was the best fit for us.”
Anaplan was selected in 2018 and implemented supply and demand planning concurrently in only 16 weeks in that year. That, I commented, was a very fast implementation. “Yeah. It did help that the company’s sales operations team had been using Anaplan previously for several years. There was some experience internally with Anaplan.” And because they were already using a SCP solution, they had already had clean master data.
The scope of the Anaplan SCP solution that is in use has increased over the past few years. “We’re currently running S&OP, demand planning, supply planning and also do some inventory management activities” with Anaplan. Mr. Morgan continued, “We do supply and demand optimization, and allocation at a finished good level. We do some capacity planning for manufacturing, manufacturing engineering, test engineering, and truck capacity.”
Because Anaplan was replacing an existing SCP, they are not currently driving any net new cost savings. Typically, supply chain planning drives significant reductions in inventory. However, in this case Anaplan has allowed for a shift in how inventory is planned. They can now plan buffers for a full Bill of Materials across the planning horizon. This replaced an Excel based, part-by-part approach. This resulted in significant time savings for the supply chain team and the contract manufacturer. It also provided more flexibility to manufacturing to adjust to changes in demand for common materials.
So, what’s next? “We’re about to go live with an order promising process. We don’t have the ability to very accurately project when we can ship an order.” Currently they go through an order on a line-by-line basis, look at the supply views projected by Anaplan, and “say yeah, it looks like we could cover it by (a certain) date.” But they can’t get a firm ship commitment until an order is released from the supply plan into the fulfillment site. “Then they look at it (the order), check their inventory and provide that ship commit date back” to their Palo Alto Networks SAP enterprise resource planning solution.
“I’m trying to get ahead of that. I’m implementing an order promising process using the Anaplan optimizer. We’ll look at all the supply and demand, optimize against that for various things like revenue or margin, and customer priorities, and then feed that into an order promising engine.” Palo Alto will then be able to commit to shipping an order on a specific week. Mr. Mogan continued, “that will be a huge benefit to our Sales, Finance and Order Processing teams. Finance will get a view into shipping linearity for revenue planning. ”Quicker, more accurate order commitments will allow them to tell a salesperson, “If you bring this order in, we can ship it by (this) date”, allowing the Sales and Orders teams to better serve our customers.