Before embarking on a string of acquisitions in the late '90s, Church & Dwight Co. Inc. took stock of its operations to figure out what it would need to support that growth. The review revealed that the company, which is perhaps best known for its Arm & Hammer baking soda and cleaning products, would have to upgrade its supply chain software. Soon after, it began replacing its in-house programs with a suite of applications designed to manage what would soon be an expanding array of consumer products.
Among the half-dozen applications it licensed was a powerful, top-of-the-line demand forecasting solution. To obtain the kind of forecasts it considered essential to good production planning and inventory management, the company invested in sophisticated software that was capable of analyzing three years' worth of customer orders and, based on its analysis, create demand forecasts 18 months out for key clients in the United States, Canada, and Mexico.
Company executives were confident they had the right software tools for the job. Yet over time, it became apparent that the employees tasked with forecasting weren't using the application bought for that purpose. Among other problems, this created extra work for the staffers who used the forecasts to set manufacturing requirements and schedule plant production.
After evaluating the situation, the executives concluded that the problem lay not in the tools, but in the company's organizational setup. To fix things, they would have to reshuffle the organization and realign reporting responsibilities. And they would no longer leave the choice of forecasting tools to the users' discretion. Instead, they would create a team of specialists and make it their job to learn the ins and outs of the forecasting application and see that it was used to its full potential.
Tools for growth
Founded in 1846, the Princeton, N.J.-based Church & Dwight makes household, personal care, and specialty products under the Arm & Hammer name as well as other well-known brands like Brillo, Arrid, and Pepsodent. Its annual revenues total about $2.4 billion.
For nearly 160 years, Church & Dwight concentrated on selling products within the United States and Canada. But that changed in 2000, when the company began a series of acquisitions that have continued up through this year. Through those acquisitions, the company has expanded globally, entering markets in Latin America, Europe, the Middle East, and Asia.
To meet worldwide demand for its products, the company operates nine plants in the United States and two overseas. It also uses about 40 contract manufacturers. Finished goods are kept in four primary distribution centers in the United States, each of which serves a specific region of the country. Outside the United States, Church & Dwight has distribution centers in Mexico, Canada, England, France, Australia, and China.
To get a better handle on its burgeoning supply chain operation, in the late 1990s, the company began replacing its in-house systems with a host of software applications from Manugistics, now owned by JDA Software Group Inc. of Scottsdale, Ariz. "We wanted tools that could support standardized procedures so we could grow," says Steve Barrow, the company's supply chain manager.
Today, Church & Dwight uses a variety of JDA software applications to manage functions ranging from transportation planning and inventory management to freight auditing and payment. On the forecasting and planning side of its operation, the company uses JDA Demand and JDA Fulfillment. JDA Demand, which is the application that set the reorganization in motion, creates sales forecasts based on historical order data it pulls from Church & Dwight's SAP system. JDA Fulfillment, an inventory optimization tool, takes the forecast data and calculates what the plants need to manufacture and where to ship the finished products. Church & Dwight also uses the application to schedule manufacturing operations at its own plants and to determine what to order from its contract manufacturers.
Up until 18 months ago, responsibility for creating the demand forecasts lay with the Sales & Operations Planning (S&OP) department, which reported to the sales division. Although the group had access to the JDA Demand software, it wasn't using the tool to develop its forecasts, preferring to use a system of its own devising.
That made life difficult for the supply chain planners who used the S&OP group's forecasts to set manufacturing requirements and schedule plant production. The planners were already using several other JDA applications in their work, and it created an extra step for them when they received data in a format that wasn't readily usable by those programs. In some cases, they would end up loading the S&OP forecast into the JDA Fulfillment tool they were using to set manufacturing requirements; in others, they would simply take the data and create their own forecasts using the JDA Demand tool. Either way, it represented an added burden for a staff that was already carrying a full load.
To fix the problem, the company decided to move the S&OP group out of sales and change its job description. From that point forward, the group's primary role would be to use JDA Demand to create forecasts. In effect, the staffers would become master craftsmen who would develop expertise in the software. That would free up the supply chain planners to concentrate on production requirements and plant scheduling. It would also, the company hoped, lead to more accurate demand forecasts, which would, in turn, lead to more efficient production plans.
In May 2007, the S&OP department was shifted to the supply chain organization and renamed the demand planning department. "Now we have a department that can put 100 percent of its time into forecasting," says Shara Fash, Church & Dwight's supply chain optimization manager, who heads up the four-person department.
Along with developing expertise in the specific software, the demand planning department also works to develop cross-functional relationships with the marketing, sales, and supply chain departments. That cross-functional communication, Fash says, enables the planners to "find out what's happening with customers and make sure that the forecasts reflect what's going on in the marketplace."
As for how it's all working out, the reports to date are positive. Since the change, the group has taken forecast accuracy to a whole new level, according to Fash. "In the last year," she reports, "we went from 60 to 80 percent forecast accuracy because of the creation of this department."