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Forecasting and Consensus Planning in a Rapidly Changing Environment - Webinar with Christine Pfefferle, Director of Global Demand and Order Management at Tellabs, |
| Predicting Future Demand in a Rapidly Changing Environment | ||
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By Christine Pfefferle, Director of Global Demand & Order Management, Tellabs |
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Early in 2001, during the telecom industry downturn, Tellabs, a major supplier of data networking and bandwidth management solutions for telecom service providers, launched a global forecasting initiative to more accurately predict future demand for its equipment. The goal was to better align the operations plan with a more accurate picture of customer demand to improve service levels and reduce potential inventory write-offs. The company was working with forecasting and planning expert, Dr. J. Tom Mentzer, and had created a Demand and Order Management organization to address the shortcomings in the demand planning and forecasting process.
Historically, Tellabs’ planners had cobbled together forecast data from multiple systems — a problem compounded by mergers and acquisitions— using unwieldy spreadsheets, manual processes spanning multiple departments, and only a minimal amount of analysis. The resulting forecasts were often inaccurate. In the post-boom economy, flexible and accurate planning would not only be critical to stabilizing current operations, but would play a center-stage role in strategic decision-making across the entire organization. However, solving this problem was no easy task. Like many technology companies, Tellabs begin outsourcing in late 2003. With this business model, forecasting and planning product sales became an even greater challenge-- 11 major product lines, 50 product families and more than 10,000 SKUs to forecast for hundreds of customers across the globe. In addition, their products were highly configurable and customized, ever-changing with constant updates. And, many of these configurations had a very short lifecycle—additional creating forecasting complexity. Further, Tellabs had independent planning processes through various departments: Sales created revenue forecasts; finance created revenue targets; and operations did product forecasts--all different processes usually with different measurements that did not tie together. They were manual processes with no timelines, all managed through a combination of SAP r/3 and Excel spreadsheets. It was difficult to maintain any consistency and data integrity. With minimal feedback between the groups, there always were differences in the numbers. The Tellabs Global Demand and Order Management team had to manage day-to-day consensus planning for hundreds of products, while supporting senior management efforts to reorient the company's entire business strategy.
Tellabs quickly identified requirements for a completely new business system, one that pushes the proverbial envelope of traditional forecasting and planning system, by including:
Moreover, Tellabs needed a solution that addressed consensus planning for complex manufacturing that would support both operational efficiency and plan performance management. So after evaluating the demand planning modules by SAP and SCM vendors, Tellabs chose Steelwedge Software (www.steelwedge.com). Steelwedge offered Tellabs a unique approach: Enterprise Planning and Performance Management (EPPM), a combination of best practices gained in over a decade of forecasting and planning research and implementation with dozens of complex manufacturers, plus a next generation technology engineered by enterprise software and business planning veterans. The Tellabs Global Demand and Order Management organization first created a standard forecasting and planning process with fixed time schedules and managed all the activities to keep all groups on schedule. There was a dramatic increase in collaboration between the sales, finance and operations departments on information and key assumptions. Then, the departments began to engage each other in a more systematic fashion. As a result, the need for intensive reconciliation went away and allowed them to move to a monthly process. Every month after the forecast is done—first the sales input is made, then the revenue targets are set, and then the product forecast is done— the teams get together to review any discrepancies and ensure that the departmental plans all in sync and they are all on the same page. Hence, the solution has also allowed them to manage forecast by exception as opposed to each line item. Today using Steelwedge Software, Tellabs creates a consensus forecast that incorporates direct feeds from Tellabs sales opportunity pipeline system and balances the bias of operational systems with quantitative and qualitative input from cross-functional teams. The new process has cut forecast cycle times and allowed staff to focus more time on analysis and planning. The Steelwedge implementation, including integration with the Tellabs CRM system used for sales pipeline management and with multiple SAP r/3 systems, took less than 16 weeks. Steelwedge now serves as the central link between Tellabs' CRM and ERP systems. Tellabs has also extended the Steelwedge solution through a web services interface to the company portal—giving users and executives access to current and historical pipeline numbers and forecasting analysis. With Steelwedge, Tellabs gained greater visibility and predictability in their business and a less costly, more effective way of planning. Not only do operations run more efficiently, during the first phase of the project, Tellabs achieved some significant strategic business results.
And with the assistance of business intelligence provided by Steelwedge Software, Tellabs has revamped its business strategy, targeting high-yield markets, internationalizing key product lines and closing major acquisitions. The result: significant quarter-to-quarter revenue gains and strategic new accounts. As the telecom industry digs out from the crash of ‘01, Tellabs looks forward with confidence. With strategic forecasting now a top priority, and Steelwedge driving consensus planning, Tellabs is set to control its own destiny. Tellabs’ Global Demand and Order Management organization has developed a highly effective cross-functional forecasting and demand planning process, setting the stage for Tellabs to move toward a comprehensive Sales and Operations Planning (S&OP) process incorporating extensive supply, demand, and financial feedback from sales, marketing, finance, and operations. The goal of the global S&OP project is to improve executive visibility and drive efficiencies across the organization. In addition to selecting Steelwedge Software to support post-merger planning, Tellabs has also chosen Steelwedge to support their its global S&OP process roll-out. Forecasting and planning “guru” Dr. J. Tom Mentzer said “Now that Tellabs has adopted best-in-class forecasting and demand management practices, increased its global footprint, and made several major acquisitions, it is natural for Tellabs to leverage the industry’s leading business planning software solution, to enable a best-in-class global S&OP process.”
About the Author
Christine Pfefferle is Director of Global Demand and Order Management at Tellabs, the technology leader in transforming the way the world communicates. Tellabs (NASDAQ: TLAB) provides innovative data networking and bandwidth management solutions to help carriers provide communications services efficiently and profitably. Tellabs has strong relationships with communications service providers in more than 100 countries providing network solutions to the world's largest and strongest carriers. Tellabs (www.tellabs.com) has been recognized for superior customer service based on survey data and awards from customers such as Verizon, Sprint, Telia and TELUS. |
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