Forecasting and Planning

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E y e O n bv

  B u s i n e s s   P l a n n i n g  &   C o n t r o l  S o l u t i o n s

Forecasting & Planning in the Food Industry
A recipe to make it light!

EyeOn bv Business Planning & Control Solutions Croylaan 14 P.O.Box 85 NL - 5735 ZH Aarle-Rixtel +31 492 388850 +31 492 388835 mail@eyeon.nl www.eyeon.nl

Planning & control solutions in leading organisations
An EyeOn white paper

Forecasting & Planning in the Food Industry
A recipe to make it light!

Drs. André Vriens MTD, Ir. Edward Versteijnen, EyeOn BV Business Planning & Control Solutions, Croylaan 14, 5735 PC Aarle-Rixtel, The Netherlands Tel +31 492 388 850. http://www.eyeon.nl/ Our special recognition goes to the members of the food & FMCG knowledge network. The white paper reflects the findings of interviews with the 22 participating companies.

Planning & control solutions in leading organisations
An EyeOn white paper

Contents
Management Summary Industry dynamics Demand trends Supply trends So what! The impact on forecasting and planning Key forecasting & planning themes in the food value chain Responsive forecasting and planning: the ingredients to make it light References 3 4 5 7 8 10 15 20

Management Summary
Over the last years forecasting and planning in the food and FMCG industry has become ever more challenging. Companies are spending considerable time and resources improving the quality of the forecasting and planning processes and hence the quality of the output. With this in mind, EyeOn has launched a knowledge network where companies in the food and FMCG industry share experiences and best practices on planning and forecasting. As a starting point for this network, interviews have been conducted with all participants to determine the current status in the industry. The interviews were conducted between March and June 2006. Since representatives from various parts of the value chain participated, good insight in the specific forecasting and planning issues throughout the industry could be achieved. In a network meeting in June 2006, the participants gave their feedback on the results of the survey and on a number of statements. This has been included in the white paper. This paper first describes the industry dynamics which puts high demands on forecasting and planning. In the second part, the key issues in business planning processes are identified: one number planning, promotion planning, upstream collaboration, the involvement of marketing and sales in the forecasting process, capacity bottleneck resolution, new product introductions and performance management were mentioned by the participants as most significant. Based on these issues 10 key ingredients are presented that guide the implementation of responsive forecasting and planning processes in the food industry. Together they compose a recipe to make planning and forecasting light! Participating companies: Aviko BASF Coca Cola DSM Friesland Foods IFF IOI – Loders Croklaan Heineken Grolsch Heinz Kloeckner Pentaplast LU/Danone Masterfoods Perfetti van Melle Purac Quest Sara Lee Suiker Unie Tetra Pak Unilever Vion Food Group Vrumona

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Industry dynamics
Over the last decades the food industry went through big changes. The consumer market becomes more challenging on aspects like availability, freshness, price, traceability and service. The retailer demands effective replenishment systems to fulfill the dynamic customer demand at lower costs. Retailer price wars increase pressure on prices, while at the same time product life cycle times get shorter, the business becomes more promotion driven and the retailer ever more introduces private label products. Developments at the supply side, as the increase in cost prices for basic raw materials and the bigger pressure on asset usage, create a pressure on the food and fast moving supply chain. Supplier consolidation and the global and regional transfer of manufacturing lead to longer lead times and require a...
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