1. 1
CASE STUDY
Demand planning delivers
commercial certainty for Lion
EXECUTIVE SUMMARY
In pursuit of sustainable improvement, Lion embarked on its Manufacturing
Excellence (MEX) journey in 2009 through the consistent deployment of the
TRACC Value Chain Improvement Solution across its entire supply chain. The
MEX framework was introduced via a staged roll-out, with five years between the
first and last implementation start-ups. In 2013 the group realised its demand
management was lagging against the industry standard and, as a direct result of
its TRACC successes across its Operations functions, decided to deepen its TRACC
relationship with the adoption of the TRACC Planning Best Practices, starting with
the Demand Planning TRACC. Now, some 18 months later, Lion New Zealand has
lifted its demand management performance to 70% per week, creating more
commercial certainty for its sales and marketing leaders. This performance
improvement also contributed circa NZ$1 million per annum towards the supply
chain’s overall cost reduction targets, as well as a drastic reduction in stock write-offs
and SKUs.
• Demand forecasting lifted to 70% per week
• Approximately NZ$1m per annum contribution
towards supply chain cost reduction targets
• DIFOT goals of ≥ 98% for all customers every month
RESULTS

2. 2
SITUATION
Demand performance across the Lion
New Zealand supply chain was low at
54% per week compared to best-in-class
FMCG companies. “We didn’t have any
sustainable systems or documentation,
or the specialist expertise to transform
the demand planning function. All the
knowledge was largely contained in
individuals’ heads, and various business
units were investing in supply chain activity through external consultants,” explains
Regan Hill, Activation and Customer Services Director.
Five years ago Lion adopted a strategic plan to migrate towards a ‘develop once,
deploy everywhere’ business model to allow them to benefit from autonomy within
a framework. This prompted them to develop and introduce the Manufacturing
Excellence (MEX) approach — supported by the TRACC Operations Best Practices.
The MEX framework was introduced via a staged roll-out, with five years between
the first and last implementation start-ups. This gave business units the freedom to
adapt certain measures to suit their own needs, yet keep it similar enough to have a
consistency for direction and feel.
The subsequent success Lion achieved across its Operations function with the roll-out
of the TRACC-powered approach was highly encouraging, and in June 2013 they
decided to extend their TRACC relationship by introducing the TRACC Planning Best
Practices across their supply chain. “Another key reason over and above the success
we had in Operations was that TRACC allowed us to follow a more sustainable and
engaging approach in-house, in line with our adopted business model,” says Regan.
ACTION
With Regan as leader of the Demand
Planning Implementation Task Force
(ITF), the first step the team took was
to recruit two demand planning
specialists. In collaboration with its
sister company Lion BSW Australia,
and Gartner, they then searched for
specialist demand software, which
enabled the organisation to ‘buy
once and deploy to both’, thus
placing them in a position to fund a
high-end demand management
software solution (Oracle Demantra).
CASE STUDY DEMAND PLANNING DELIVERS COMMERCIAL ...
“I have learnt that it’s possible
to get consistent and sustained
performance through better
planning processes and
practices.”
– Regan Hill, Activation and
Customer Services Director

3. 3
This was followed by the implementation
of the Demand Planning TRACC in order
to build sustainable processes. “One key
task prior to the TRACC roll-out,” says
Regan, “was to define how many unique
supply chains we had that required
different demand planning policies.
Having identified six in total, this
determined our Demand ‘rules of the
game’ for our operational, tactical and
strategic horizons for each of these
supply chains.”
According to the team, the integration with TRACC was easy as the system is maturity-based,
which acknowledges prior learning. This process helped them identify gaps in
their CI system and approach. The TRACC successes in the Operations function also
enabled the smooth introduction of visual management, which allowed the team to
monitor forecast accuracy and bias on a weekly level to determine the actions to be
taken. According to Regan the integrated approach to demand planning “supports our
strategic initiative to establish a world class demand system that delivers a ‘one number
forecast’ which will meet all business unit forecasting requirements”.
RESULTS
Demand forecasting performance has lifted to 70% per week, creating more commercial
certainty for Lion New Zealand’s Sales and Marketing leaders to enable more effective
planning. This performance improvement contributed approximately NZ$1 million per
annum to the supply chain’s total cost reduction targets. The successes have also seen
Lion achieve its DIFOT (Delivered in full and on time) goals of ≥ 98% for all customers
over the last 18 months. Stock write-offs reduced by 63% from 2013 to 2014 — nothing
short of remarkable. In addition, an annual customer survey showed an increase in
performance on the key touch point of
‘grown stock availability with customers’.
CASE STUDY
“The use of TRACC to improve
business processes like
Demand Planning ensures a
clear path to best practice,
and delivers both sustainable
processes and continuous
improvement.”
– George Bearzot, Supply Chain Director,
Lion New Zealand
“This work is vital to allowing
our customer experience
vision to flourish. Lion is easier
to do business with.”
– Regan Hill, Activation and
Customer Services Director
DEMAND PLANNING DELIVERS COMMERCIAL ...

4. 4 l info@traccsolution.com www.traccsolution.com E10/14
COMPANY BACKGROUND
Lion is a market-leading food and beverage company operating in Australia and
New Zealand. Employing nearly 8 000 people, Lion has a diverse portfolio of
household name brands in beer, wine, spirits, milk, fresh dairy foods, juice, cheese
and soy beverages. The group generates a total economic contribution to the
Australian and New Zealand economies of around NZ$5.7 billion. This comprises
NZ$2.61 billion of direct contribution, through employment, sourcing and other
investments, with the remainder reflecting the significant value Lion’s business
generates upstream in the agricultural sector and downstream in the retail,
tourism, hospitality and transport industries.
Following an impressive first 18 months, the Demand Planning ITF highlighted the
following key learnings:
• Make sure your practice improvements are real and relevant to your business
(don’t just tick the TRACC boxes)
• First build the Task Force’s understanding of the TRACC as opposed to succumbing
to the temptation to start improvement initiatives early
• Make sure your team has a real and meaningful sense of purpose
• Ensure there is a knowledgeable and passionate executive team sponsor of this
initiative
• Visual management on a regular basis is the key to knowing how well you are
progressing
• You can build significant trust and engagement with senior stakeholders when you
can demonstrate great forecast performance during times of change
• Be patient — get the basics (i.e. Stage 2) completed before getting excited about
future stages
• Take on board and seek out some practical advice on how to bring your new
practices to life in real terms, not in book terms
CASE STUDY DEMAND PLANNING DELIVERS COMMERCIAL ...