Simoniz is a company dedicated to understanding the needs of its consumers, who are passionate about the world of cars and motorbikes. For more than 30 years it has positioned itself as a leading company in the automotive sector for the care, beautification and protection of vehicles, through products developed and tested with high quality standards. Currently, Simoniz is present in more than 5 countries in the region with production and marketing capabilities that are expanding to meet the needs of its customers. It has a portfolio of more than 5000 products and annual sales of more than 25 million dollars.
With more than 2.2 million units sold monthly across its different product categories and distribution channels, demand planning, production and inventory management become key processes in its supply chain. In order to meet the service levels required by customers, while keeping inventory levels to a minimum.
The main objective is to achieve a sustainable balance, where product availability is ensured without incurring excessive inventories that exponentially increase operating expenses and storage costs.
Expectations & Benefits
High service levels are evidence of proper inventory management, preventing stock-outs or product unavailability, which translates into increased sales revenue. In turn, low inventory levels free up working capital, captured by slow-moving, obsolete or overproduction products that lead to overstocking.
In order to achieve supply chain operational excellence, Simoniz integrated its Siesa ERP with Datup's artificial intelligence (AI)-powered Demand Planning and Optimised Inventory SaaS solution. The benefits were:
Increase sales revenue by up to 4 times by increasing service levels on products in the portfolio with the highest revenue and turnover.
Decrease overstock volume by up to 3 times by reducing inventory levels related to overstocking.
Generate hourly and weekly demand forecasts for 5000+ active items with accuracies greater than 85%.
Integrate in a matter of weeks: sales history, demand, promotions, commercial forecasts, out of stock, inventories and master tables without investing in servers or specialised personnel.
Increasing Service Levels, Reducing Losses
Figure 1. Projected stockouts based on Simoniz's sales budgets versus Datup's demand forecasts for 2020-Q3, 2020-Q4, 2021-Q1 and 2021-Q2.
The first efficiency front consisted of increasing service levels, preventing potential stock-outs and stock-outs. Product availability, in the face of purchase intent in the different service channels, directly affects the realisation of sales and associated revenues.
Datup and its Demand Planning solution identified the products with the highest revenue, turnover and variation through an ABC-FSN-XYZ analysis. The references with the greatest impact on sales through the improvement of their service levels are those with the AF classification. That is, the references with the largest shares in revenue and turnover, according to historical demand.
Forecast accuracy on high value products must maintain high scores, as every percentage point below actual demand represents hundreds or even thousands of units that will not be part of the production plan, compromising product availability, and consequently service levels and revenues. Datup's WMAPE forecast errors were between 1%-18% for all high-value references. As a result, service levels exceeded the 90% threshold supported by demand forecasts, rather than commercial budgets or manual adjustments with high levels of uncertainty.
In order to quantify the benefits obtained, potential out-of-stock losses were estimated with respect to actual demand in 2020-Q3, 2020-Q4, 2021-Q1 and 2021-Q2, based on Simoniz's sales budgets versus Datup's demand forecasts. In the year under study, the potential revenue foregone due to product unavailability was 11.12 billion with Simoniz's demand planning process versus 4.6 billion with Datup. This represents a 250% improvement in sales revenue by guaranteeing product availability supported by a demand planning process supported by the automation and autonomy of artificial intelligence (AI).
In the project preparation stages it is possible to estimate these efficiencies with Datup's ROI Calculator Calculate estimated ROI when implementing DATUP in your businessThe savings generated by availability and inventory management can be as much as 6 billion.
Lowering Inventory Levels, Reducing Operating Costs
Figure 2. Projected overstocks based on Simoniz sales budgets versus Datup demand forecasts for 2020-Q3, 2020-Q4, 2021-Q1 and 2021-Q2.
A second efficiency front derived from demand planning with Datup focused on reducing operating expenses and warehousing costs due to excess inventory. In addition to increasing service levels and revenues, demand planning with Datup focused on reducing inventory levels in order to commit less working capital in the short term.
In general, demand planning efforts tend to overestimate the volumes to be produced in order to prevent losses due to stock-outs. While this practice ensures product availability for most demand scenarios, it also generates considerable overstocks due to partially fulfilled sales expectations. Cost overruns related to increased inventory levels then become a problem with continuous and sustained growth over time.
The demand planning supported by Datup also offers an answer to this oversupply scenario. Based on the solution's high-value product classification and demand forecasts, the resulting excess inventory was compared to historical demand for the quarters 2020-Q3, 2020-Q4, 2021-Q1 and 2021-Q2. The same comparison was made by taking the resulting overstocks based on Simoniz's sales budgets. The oversupply volume for Simoniz totalled 16.6 million units. Datup totalled 11 million units, representing a 160% efficiency in inventory levels.
It is possible to translate this efficiency into savings by cross-referencing all expenses and costs associated with storage and maintenance by reference with the help of Datup's ROI calculator. Calculate estimated ROI when implementing DATUP in your business. Savings from inventory management, purchasing, supplier management, personnel and physical infrastructure reach 300 million per year.
Finally, it is worth highlighting the performance of the 2021-Q1 quarter, being the only period where Datup's forecasts generated 60% more excess inventory (Figure 2). However, for this same period, Datup's solution estimated 400% lower losses due to stock-outs (Figure 1). The highest of all periods analysed. This demonstrates how artificial intelligence autonomously maximises profits in one scenario, in response to lower returns in others, which is a constant challenge in supply chains.
Operational Efficiency
Datup's Demand Planning and Optimised Inventory solution puts the advantages of software as a service, artificial intelligence and automation at the service of its customers. For Simoniz it means having a solution available 7×24, with levels of accuracy and insights beyond the reach of traditional solutions, and response times in minutes.
Simoniz's demand planning involves forecasting more than 5800 individual references and more than 1200 promotional combos, considering for each one short, medium and long term forecasts in 5 demand scenarios: base, moderate upside and downside, extreme upside and downside. The process is executed automatically and autonomously in 6 hours each week, in order to support demand and production planning with decisions supported by data evidence and the effectiveness of artificial intelligence.
Ready-To-Go Data
By starting down the road with Datup's Demand and Inventory Planning solution, Simoniz has achieved additional benefits in the continuous improvement of its supply chain:
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Reducing the operational workload of the teams: The solution has enabled the demand and production planning team to reduce operational tasks that used to take up around 80 hours per month (50% of their working time) to 2 hours per month. The time saved is now spent on more strategic tasks, taking advantage of opportunities and better preparing for the challenges of business growth.
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Improve transparency and visibility: Through control panels or dashboards provided by Datup, they have unified information from their own systems, customers and suppliers, facilitating the follow-up and monitoring of the planning of more than 6000 references and promotional kits, warning of important changes with respect to the business value.
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Refine the productportfolio: Based on the ABC-FSN-XYZ analyses, strategies were generated to assess the revenue share versus maintenance costs for each product reference. Thus, attention was focused on the references of high value for the business and on those candidates for a purging or decommissioning process. This type of analysis is carried out on a regular basis, based solely on the results delivered by the Datup solution, rather than diverting multiple resources into its preparation and generation.
Quick-wins
By starting down the road with Datup's Demand and Inventory Planning solution, Simoniz has achieved additional benefits in the continuous improvement of its supply chain:
Reducing the operational workload of the teams: The solution has enabled the demand and production planning team to reduce operational tasks that used to take up around 80 hours per month (50% of their working time) to 2 hours per month. The time saved is now spent on more strategic tasks, taking advantage of opportunities and better preparing for the challenges of business growth.
Improve transparency and visibility: Through control panels or dashboards provided by Datup, they have unified information from their own systems, customers and suppliers, facilitating the follow-up and monitoring of the planning of more than 6000 references and promotional kits, warning of important changes with respect to the business value.
Refine the productportfolio: Based on the ABC-FSN-XYZ analyses, strategies were generated to assess the revenue share versus maintenance costs for each product reference. Thus, attention was focused on the references of high value for the business and on those candidates for a purging or decommissioning process. This type of analysis is carried out on a regular basis, based solely on the results delivered by the Datup solution, rather than diverting multiple resources into its preparation and generation.
Learn more about Datup
If you are interested in learning more about Datup and its SaaS supply chain solution we invite you to visit:
Our SaaS platform Datup | Onboarding to create your account, upload your data and generate your first forecasts in a self-service mode.
Our website Supply Chain Solutions with Artificial Intelligencewhere you will find out more about our customers, use cases and benefits for supply chains.
Our ROI calculator Calculate estimated ROI when implementing DATUP in your business to find out what the estimated ROI of implementing Datup in your business will be.
Our blog Blog Datup | How to apply Artificial Intelligence to optimise your business where you can subscribe to relevant articles about Artificial Intelligence in your supply chain, automate business processes and integrate external data into your processes to make strategic decisions.