Polaroid was a company in recovery, needing to balance the Sales & Operations Planning functions in order to save money and resources. Ideally, planners could continually adjust SKU/sub-SKU demand and production while matching the business to marketplace realities. Polaroid with IBM created a solution to provide management with a continuous view of the future, enabling them to provide conscious, top-down direction.
Mark Payne is Vice President of Operations for Polaroid Corporation. He is responsible for the company’s supply-chain activities worldwide, including manufacturing, logistics, procurement, and forecasting & planning. He also oversees information technology, e-commerce, security, and real estate. Since joining Polaroid in May 2003, Mark has led several strategic programs that have helped streamline the company’s business processes and generate back-to-back years of profitability. Currently, he is involved in integrating Polaroid into the Petters Group Worldwide as part of a merger agreement.
Payne explained that Polaroid is essentially a manufacturing company making film, chemicals and batteries. Polaroid went into bankruptcy in 2001 because the company was too slow to respond to the digital revolution, which put the whole film industry into decline. Polaroid had to stabilize its core business and develop and launch new products. To do this, Payne explained that Polaroid needed to improve market responsiveness and business planning efficiency, as well a increase flexibility in order to grow the business.
Polaroid needed to balance supply and demand for products. The manual, spreadsheet-intensive approach with monthly planning meetings for executives and the supply-and-demand planners was slow and ineffective. The reality is that nothing goes according to plan. The actual execution was driven by individual planner’s best guesses, then adjusted to reality. The executives essentially were making decisions on their gut feelings and there was always an “over-correction” when reacting to surprises as they became apparent.
In the old system, demand planners measured forecast accuracy at the product family level. The supply planners measured on delivery performance at the SKU level. Using the new system, created with the help of IBM, planners now measure whether their SKUs fall within predetermined W.O.H targets. This can be continuously monitored.
The new weekly planning process sets forecast parameters, plans strategy, monitors sales and demand, predicts outcomes, then executes the new directives. The goal of the process is to balance inventory weeks on hand within pre-defined targets for SKUs. Plans are developed and maintained at the SKU level for four global locations. The solutions are used by 15 planners located in three regions. Planners adjust the demand plan for each SKU at the sales forecasting entity level by week across 104 weeks. The planners monitor individual SKU behavior with personalized dashboards, reports and alerts about overstock and stock-out issues. Executives use the same capabilities to monitor the expected performance of the company at the aggregate level.
The managers and executives monitor forecast accuracy by individual planner and product family. They watch for imbalances in supply and demand for future periods and they can leverage what-if capability to predict what changes to the supply or the demand for a given SKU will rebalance supply and demand.
The impact of various approaches can be reviewed and the best means for solving the problem chosen. When managers choose to execute the new plan, the changes are written back to the SAP MRP system. As planners adjust the plan, executives can see the immediate rollup of actual and current plans across the enterprise and they are able to provide fact-based, top-down direction to the team to help steer the enterprise to meet corporate objectives.
The benefits have been substantial. The business now runs on a single set of numbers and decisions are made four times faster with ten times more detail. There is a 50% process efficiency improvement and cost savings in planning functions and a 10% to 20% reduction in inventory. Polaroid has become a proactive, rather than a reactive enterprise.
