Digital twin paves the way for better sales planning and high product availability
by Tobias Brasch, Abels & Kemmner GmbH; Peter Schmidt, wolfcraft GmbH*
In the highly competitive field of tool manufacturers, wolfcraft stands out as a quality-conscious innovator in stationary retail, DIY stores and online retail. Above-average annual growth rates are achieved in the online business in particular, but these are accompanied by highly volatile demand behavior. In addition, ‘do it yourself’ videos are shared by influencers on popular social media, in which wolfcraft products are presented and lead to explosive peaks in demand.
“The introduction of our contour gauge by an influencer on YouTube caused demand for our tool on Amazon to explode. Thanks to our new planning concept, which we tested together with Abels & Kemmner with the help of the digital twin, we were able to redirect the volume flows accordingly and maintain a high level of readiness to deliver.”
Peter Schmidt, wolfcraft
The increasing popularity of wolfcraft products, high availability promises and the widely differing demand behavior between online and offline markets place the highest demands on both planning and the provision of articles.
Digital twin for situation analysis of logistics business model and sales planning convinces
wolfcraft opted for external support from the supply chain optimizers at Abels & Kemmner in order to leverage potential for improvement and secure its growth course. The consultants’ proposed approach of a situation analysis with the concept of a digital twin of the ERP data convinced the decision-makers.
A key element of the methodology was the dynamic simulation of the interplay of value stream behavior and planning and control mechanisms in wolfcraft’s value chain based on empirical data. These simulations were accompanied by cross-departmental discussions between purchasing, sales, planning, controlling, product management and scheduling in order to gain a holistic understanding of wolfcraft’s processes.
Based on the project workshops and initial simulation tests, optimization approaches were developed and tested and optimized using simulations in the digital twin. Four central recommendations were developed by the joint project team from wolfcraft and Abels & Kemmner.
Recommendation 1: Improved availability through separate planning of sales markets
A key starting point for better forecast quality is planning transparency – what is planned for which market, in what quantities and for what period of time.
With the help of the digital twin, a three-stage sales planning process was developed and tested for feasibility.
The starting point of the new planning process is the breakdown of the demand behavior of an item by market segment. Depending on the sales channel and customer segment, any given item can exhibit fundamentally different demand behavior, which leads to different forecasts for these sales channels and customer segments. In order to take into account the different demand behavior in the planning process, the digital twin was used to check the extent to which it makes sense to divide the articles per customer group and generate separate planning articles per segment, which transparently show the respective demand behavior and give the planning department a better overview. Various planning mechanisms were tested and optimized in order to identify customer-specific trends.
In the next step of the new planning process, a so-called baseline forecast is calculated for the individual planning items on the basis of historical consumption. Peak demand and other outliers from the past are excluded; soft facts, such as trends and seasonal factors, are added. Checks in the digital twin showed that this can be done very efficiently and partially automatically.
In the final planning stage, all types of extraordinary sales campaigns are included, such as promotional and marketing campaigns and discount offers that attract greater customer interest in certain items. The customer and product hierarchy level at which planning can be carried out in order to keep the planning effort for sales low but obtain sufficiently precise data was again checked in the digital twin.
The result of this planning process is a comprehensive picture of requirements in which all available information has been included and mapped.
Recommendation 2: Change the stockpiling levels
In conjunction with the planning, the logistical decoupling points in the value chain were also checked in the digital twin and optimized as part of a decoupling point analysis. For the analysis, various stockpiling strategies were considered in cross-plant simulations and evaluated with regard to high availability and low stocks. Potential stock reductions of 36% to 46% were identified without falling below the required delivery readiness. The greatest simulated potential was identified with the construction of a supermarket in front of the assembly lines. The use of the reorder point procedure has significantly reduced the scheduling effort.
Recommendation 3: Automatic optimization of forecasts and safety stocks
Further potential for ensuring delivery readiness with low stocks was identified in the improvement of forecasts and the more correct calculation of safety margins. Simulation tests in the digital twin showed that the forecast quality can be significantly improved if the forecast procedure to be used for each item and the associated safety stock procedure are regularly checked and, if necessary, adjusted. is replaced by a more suitable one.
Recommendation 4: Establish a sustainable and automatic rule catalog for master data
Further potential for improvement was identified in the maintenance and ongoing servicing of the article master data relevant to planning and scheduling. In the digital twin, it was possible to develop criteria for determining which master data settings need to be made under which conditions for an item.
Digital twin shows limits of ERP and opportunities in sales planning
Realizing the identified improvement approaches in the existing ERP landscape would have entailed very high costs, so a suitable software solution was sought to complement the ERP system. In collaboration with Abels & Kemmner, a catalog of requirements was drawn up for a selection process that significantly supported the search for a suitable tool.
* Peter Schmidt is responsible for logistics management at wolfcraft; Tobias Brasch is SCM consultant at Abels & Kemmner GmbH
