How Eveready Brought Down its Forecast Errors

Summary:

Battling inefficient manual systems, Eveready Industries’ new businesses were reporting 60 percent forecast errors. Here’s how its CIO turned that number into75 percent accuracy rate.

Reader ROI:

How an automatic forecasting system helps bring down forecasting errors.How automated forecasting helped Eveready identify issues in production workflow

The Organization: Not many companies have as diverse a portfolio as Eveready Industries. From manufacturing rechargeable batteries, the Rs 925 crore company has extended its profile to include insect repellents, halogen lamps, home lighting, LED lanterns and tea. Today, Eveready’s network of 2,600 direct distributors reach out to 3.5 million retail outlets in India.

Business Case: Typically, Eveready’s products are either sent to six ‘mother’ warehouses or 32 ‘child’ warehouses based on truckload. Mother warehouses accumulate goods and supply them to the respective child warehouses based on a dispatch schedule. The direct distributors then pick up goods from these warehouses and transport them to retail outlets.

Now, the most important component, the dispatch schedule, was planned by carrying and forwarding agents (C&F agents)—mostly non-skilled workers–based on the availability of trucks.

Arup Choudhary, GM-IT, Eveready Industries, automated demand forecasting and increased accuracy by 30 percent.

“Demand was entered on an excel sheet based on ‘gut feel’. We spent a lot of time consulting other departments and phoning carriers,” says Arup Choudhury, GM-IT at Eveready Industries. Due to processes that were unplanned and untrackable, there were occasions when truckloads of material ranging from 9-16 tons had gone missing.  “No one could be held accountable. Unplanned transportation was also increasing our freight costs,” he says.

Often, goods sat at warehouses, blocking space reserved for other goods.  “There was a significant gap between our forecasts and actual sales. We found that our newer businesses like lighting were suffering from forecast errors of 60-70 percent,” he says.

Solution: What Eveready needed was an automated forecasting system. Chaudhary decided to expand the existing supply chain’s production planning horizon from 30 days to three months with Oracle’s sales and operations planning module. Integrated with its ERP, this planning module forms a link between production planning, sales and dispatch. Sales people input demand figures into the planning module. Then demand planners—managers at Eveready’s headquarters, not C&F agents—validate the figures and send final forecast to the supply chain head. The system then runs a material and dispatch requirement plan to arrive at a demand forecast number.

While the production plan materializes, Eveready’s warehouses receive their trip planning sheets created daily by the head office based on the availability of trucks.

Arup Choudhary, GM-IT, Eveready Industries, automated demand forecasting and increased accuracy by 30 percent.

Benefits: And today, this has helped Eveready improve forecast accuracy. Its batteries business clocks 85-90 percent accuracy rate and the lighting business at 75 percent. Not only did the project allow managers to identify issues that slowed down production and distribution, it also dramatically reduced the time it took to develop a consolidated distribution plan from 72 hours to merely 1.5 hours.

Today, the company is ever-ready to forecast demand and get it right.