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    Heavy Equipment Manufacturer Success Story 

    Implementing consistent sales and operations planning and inventory management to release cash

Driving change across 18 entities spanning seven countries and five continents

The challenge

A multinational construction equipment manufacturer built through the acquisition of 18 entrepreneurial companies was suffering from excess inventory across raw, work in process and finished goods. The organization had over $400M in inventory, which was consuming free cash.

Senior executives had no visibility into company data and were unable to accurately forecast future requirements resulting in a misalignment between sales expectations and inventory. This, combined with a lack of communication between the businesses, meant no one in the organization had a clear picture of what was happening in the market.

In a bid to overcome these issues and release millions of dollars in cash, leadership engaged Maine Pointe. Our objective was to rapidly and sustainably implement a sales and operations planning process, accompanied by inventory management practices, across all 18 subsidiaries.

This story is for CEOs who:

  1. Are operating multiple entities with a large geographic spread and do not have visibility across their organization
  2. Want to drive short and long-term financial performance and release cash
  3. Want to rapidly and sustainably implement S&OP and inventory management processes across their business
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Don't build what can't be sold. Don't buy what isn't needed

Maine Pointe’s focus in this engagement was on identifying key individuals across the business and going out into the field to coach and develop them as S&OP practitioners. Given that many people across the organization had not heard the term “sales and operations planning” before, this was a significant challenge. Within 12 weeks, the first S&OP pilot was underway, and all 18 entities were calculating required inventory levels based on the ‘plan for every part’ tools deployed by Maine Pointe.

Our solution included:

  • Identifying and talking face-to-face with key personnel to secure buy-in for Maine Pointe’s cross-functional approach
  • Tailoring our approach to the culture and requirements of each individual business unit while deploying consistent concepts across the company
  • Delivering S&OP training and implementing a regular program to ensure learning was reinforced and processes were fully embedded
  • Establishing the following channels of cash release:
    Demand forecast build plan modifications
    Delay or cancelation of unnecessary parts and material prior to commitment
    ‘Plan for every part’ month-to-month analysis to evaluate inventory flow through the system and revise required quantity, reducing excess inventory
  • Applying Maine Pointe’s 6-step strategic sourcing process to mature the approach to market

The mantra, “Don’t build what can’t be sold. Don’t buy what isn't needed,” became common place across the 18 subsidiaries with over 200 personnel engaged in inventory management and sales and operations planning cross-functional teams. S&OP skills were transferred to more than 150 personnel across the organization to assure sustainability. More advanced demand forecasting techniques were transferred to a further subset of 40 personnel.

The results

Maine Pointe’s hands on approach and cross-functional, Total Value Optimization (TVO)™ methodology delivered the following benefits:

  • Saved $2.5M in inventory production prevention in five weeks with a further $3M saving within 12 weeks in the lead facility
  • Increased resource planning forecast from two days to 90 days enabling the optimization of labor spend
  • Trained 180 sales & operations planning and demand planning personnel in 18 business entities across seven countries and five continents
  • Within seven months of starting, all 18 subsidiaries were leveraging inventory management tools and practicing a common sales and operations planning process
  • Released $51M in cash 
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Lessons learned for other executives

  • If you do not have executive level visibility of important business metrics and KPIs, you are not truly implementing S&OP
  • Data-driven demand forecasting enables leadership to recognize the condition of the market and balance working capital and margin preservation against true revenue projections
  • Delegating authority to local business units without a corporate S&OP approach can significantly impact executive visibility and financial performance

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