LivaNova increases Visibility and Demand Forecast accuracy with SAP IBP
LivaNova is a global medical technology supplier, leader in providing neuromodulation and cardiovascular solutions by developing numerous therapies and products.
Currently, LivaNova has more than 3000 employees in its offices spread across 100 countries.
LivaNova had extensive operations, for which they needed a sophisticated yet straightforward solution for their demand planning processes.
The supply chain planning explicitly requires a solution for precise demand forecasts meeting customers’ future needs and increasing profitability. After proper analysis, we identified the following primary challenges that prevent our customer from being efficient across its supply chain and developing accurate forecasting.
Enterprise resource planning system (ERP) is a combination of integrated software applications streamlining operations across all business departments. In the case of LivaNova, they lacked a system integrating the operations of all departments, i.e., fragmented ERP. This situation was negatively affecting productivity due to duplication of information and repetitive entries. Because of fragmented ERP, it was impossible for LivaNova to have an integrated demand planning system consolidating all information from different sources. Their employees were manually filling crucial data, which ultimately made all operations susceptible to human errors.
The manual collection of data across several excel sheets led to a generation of either multiple or insufficient documents for data storage. In addition, the absence of one ERP system eventually resulted in unorganized data, which caused difficulties in managing it. As mentioned earlier, the employees were manually recording data, and they had unique systems to store it.
Overall, their demand planning process needed proper definition and structure, which is precisely what we implemented with our demand planning solution. We deduced critical operational problems and provided both strategy and a tool to deal with them.
We thoroughly inspected all aspects of demand planning processes at LivaNova to design and implement the solution in six months. The solution encompasses a hybrid-agile methodology, a well-defined process and a powerful tool.
To enhance the previous process, demand planning was split in different subprocesses:
- Statistical forecast step based on historical data gathered from source systems to provide an automatic sales plan proposal.
- Formal consensus process to embed all existing sales plan inputs and develop one reliable system for data collection, storage, and management. In this way it was possible for all business departments involved in the demand planning process (i.e. demand planners, sales planners, finance, etc.) to provide their inputs and get to a consensus.
As usual in this kind of project, it is not possible to introduce a new or enhanced business process supported by a new system, without taking into consideration the change management impact. A new process may require a review of the organizational structure in terms of roles and responsibility, as well as a new system may require new operating procedures and training needs.
The tool: SAP Integrated Business Planning
SAP Integrated Business Planning (SAP IBP) aligns business operations in order to obtain financial as well as operational goals. At LivaNova, we established the system by integrating data and automating required processes which ultimately eliminated the frequency of human errors. SAP IBP integrates with SAP ERP through a Business Intelligence system.
Output wrap up:
- Consensus Demand Plan.
- Mape, Bias versus last year versus RFx all generated automatically.
- Automatic KPIs: Mape, Bias, versus last year, versus RFx all generated automatically.
- Short and long-term planning: here we established systems that are capable of generating accurate demand forecasts for specific periods of time, i.e., month, quarter, year, etc.
- System Integration: we complemented integrated source systems (transactional and BI) with one unified system.
Focus on the Consensus Demand Plan
SAP IBP generated the Consensus Demand Plan, an agreed-upon demand forecast generated in the consensus meeting between regional, commercial, and finance departments. The system we implemented functions as one formal planning system officiating all incoming data. In addition, the system detects the fluctuation or anomalies in data, which helps the operators rectify the situation.
We have replaced the majority of issues hampering the smooth functioning of supply chain operations at LivaNova. We have enabled the systems to retrieve accurate information. With automation, the processes are now independent of manual data collection, slowly eliminating human errors.
The current challenge here was the lack of transparency caused by the error-susceptible data and the lack of a single source of truth in terms of forecast volumes and values. With our help, LivaNova has one unified system to manage and organize data properly. This proper management of data will be uniform throughout all units across the globe. Such transparent data recording will increase visibility and help management to make precise decisions.
The statistical forecast will utilize historical data to provide commercial intelligence. This will enable the officials to make well-calculated decisions.
We circumvented the on-premise management and maintenance of servers, which proved to be an intelligent move, saving time and reducing the cost of manual delegation of the duties. The new Demand Planning system based on SAP IBP will lead to proper statistical forecasting in the future, facilitating internal and external communications. The improved communication is time-efficient and enables the operators to make more calculative decisions in real-time.