In one year, Peter Justesen has reduced their stock value with 57 % and improved service levels, cash flow and stock turnover. This has been accomplished by focusing on SCM, category management, and S&OP with the support of ABC Analyzer.
“Supply chain, category management and sales & operations planning are vital means in order to create a profitable growth in our business”
Bo Quist, COO at Peter Justesen continues: “We are a trading company, that sells to customers in 140 countries and have therefore always been strong in both sales and purchasing.
What is new, is that we now optimize the entire value chain and balance supply and sales through a systematic sales & operations planning process.
This approach provides us with a foundation for a differentiated management of purchasing as well as orders and product flow. This benefits both our customers and our business”.
ABC is a driver for change
Since 2014, Peter Justesen has been using ABC Analyzer as one of the tools to lead and control supply chain and product range. “It is very important to us, that it is not simply an operational tool.”
“At our company ABC Analyzer works both as a strategic, tactic, and operational tool.”
“It creates far more value to us, when we also use it to strengthen the transverse collaboration, create changes, and change behavior in the whole organization”, says Bo Quist.
Data for all levels
ABC Analyzer provides data for decision making on three different levels:
- Supply Chain Management
- Operational Purchasing, Customer Service, and Sales
Furthermore, ABC Analyzer is a cornerstone in the important sales & operations planning process, where sales and supply chain synchronize supply and demand.
Strong visual communication
Peter Justesen uses ABC Analyzer for many specific tasks, like:
- Common visual language across departments
- Sales & operations planning
- Optimization of sourcing
- Supplier negotiations
- ABC guidelines for sales and customer service
- Calculation of saftety stock
- Product life cycle management
In particular, Bo Quist highlights that ABC Analyzer is very visual and intuitively communicates with colors how the status of a given product group is.
The differentiated management
ABC Analyzer helps Peter Justesen optimize the value chain, where it creates the most value for both customers and the company.
“We have created a common foundation for selling, providing service, controlling inventory and purchasing in order to establish a common ground for all parts of the value chain”, says Bo Quist.
Peter Justesen has about 11,000 product numbers in their assortment, of around 700 products of those are AA-products: They are highly sought by the customers and contribute the most to both top- and bottom line.
“Everyone knows exactly which products to focus on, when we need to forecast the sale, make the purchases, calculate the safety stock and so on. The rest of the products will automatically be supervised by our ABC-model, which automatically sends a notification when actions, based on a defined set of rules, are being made”, he says.
For example, the company has introduced differentiated service levels on all ABC-codes, and today Peter Justesen is above target on all service level KPIs.
Focus on the essentials
The ABC-model provides a transverse, user friendly tool which enables the entire organization to focus on the products that are most important for the business.
“The ABC-model makes it much simpler for us to implement ongoing forecasts and S&OP, also it has become easier for us to continuously redevelop the product assortment.”
“For example, we can supervise new products’ behaviors during the first 180 days, and we can quickly identify the long tail of the products that are not selling well, and therefore might need to be discontinued from the assortment”.
The next step for Peter Justesen will be to implement a more market orientated sorting system, where the company will get a better insight in the demand patterns distributed on markets, customers, nationalities and so on. “There are many opportunities for us to become even more precise in our value chain, so we will continue to become better at predicting and delivering value”, says Bo Quist.