Fonterra Brands (NZ): Finding the core ingredient for integrated business planning
Simplify and enable integrated business planning capabilities
Fonterra Brands (NZ) Ltd. is one of New Zealand’s leading fast-moving consumer goods businesses, bringing dairy products to people worldwide. It wanted to enable real-time integration and data insights in its business planning to improve the accuracy of demand, supply, and financial forecasting. The SAP Integrated Business Planning for Supply Chain (SAP IBP) solution meets this need.
| Industry | Region | Company Size | Partner |
| Consumer goods | Auckland, New Zealand | 1,200 employees | GoSCM, HCL Technologies Limited (HCLTech), and Sysdoc Ltd. |
reduction in dated products that would have gone to landfill.
improvement in forecast accuracy.
Financial Controller, Fonterra Brands (NZ) Ltd.
Developing an integrated business planning capability
Fonterra Brands (NZ) Ltd. (FBNZ) is part of Fonterra Cooperative Group Ltd., the world’s sixth-largest dairy cooperative and New Zealand’s biggest company. Its stable of much-loved consumer brands includes Anchor, Mainland, Kapiti, and Fresh’n Fruity. Given that the core ingredient (milk) has a very short shelf life, FBNZ needed to help ensure it plans, makes, and delivers products that meet customer demand and reach consumers with the utmost freshness and goodness.
The sales, demand and supply, and financial planning systems were housed on an old infrastructure, and applications needed upgrading alongside a sunset solution. Integration was complex and minimal, with leakages between systems and the need for rationalization of systems and processes. The basic data cleansing and statistical forecasting tools lacked the ability to capture and manage customer forecasts, collaborate on a sophisticated level, and use AI capabilities.
The forecasting process was not robust, required manual data maintenance, and offered limited scenario planning functionality. The availability of only one adjustment line to make changes also impeded forecast accuracy. FBNZ could not efficiently analyze the financial impact of volume forecast, as the linkage of volume and financial values in a single view wasn’t readily available. This was compounded by system performance issues for large data sets, so data had to be transferred to another tool for analytics and review of forecasts and budgets.
Demand planning at FBNZ is challenging due to the fluctuations in a fast-moving consumer goods environment and increased variations from trade promotions. The company wanted a more strategic and integrated solution that delivered efficiencies, accuracy, and better collaboration that would empower its team to focus on value-adding tasks instead of time-consuming manual data maintenance. FBNZ embraced an integrated business planning methodology for supply chain management and sought to enhance its process and technology capabilities to make faster, more agile, and better-informed decisions based on real-time data insights.
IT Manager, Fonterra Brands (NZ) Ltd.
Strengthening the demand planning and forecasting processes
FBNZ chose to replace its highly customized planning solution with a standard cloud application, the SAP Integrated Business Planning for Supply Chain (SAP IBP) solution. This integrated, robust, and real-time solution brings together demand, supply, and financial forecasting in line with the company’s integrated business planning process. FBNZ also rolled out the SAP Integrated Business Planning application for demand, which it integrated with SAP ERP Central Component (SAP ECC) for master data and incremental volume forecasting from its trade promotion management system.
The company combined the pricing and standard cost data from SAP ECC with forecasted trade spend from the trade promotion management system and created a series of key financial figures based on the planned volume. This allowed the company to gain insights into planned revenue, discounts, trade spend, cost of goods sold, and standard gross margin at the customer and product levels across time in a single view. Six key adjustment figures enable better tracking and visibility of plan changes, with high-level adjustments cascading to the lowest level and vice versa. Different versions were enabled to capture the budget as well as current-, last-, and prior-month snapshots of forecasts. Scenario modeling is also available. Collaboration, simulation, and adjustments can now be done at various times during the planning process. And data is visualized in the Microsoft Excel front end. The output of the standard gross-margin forecast is reviewed and signed off through the monthly integrated business planning process.
GoSCM was the main implementation partner in deploying SAP IBP, HCLTech was an integration and (ongoing) support partner, and Sysdoc provided advice around change management and training documentation. FBNZ worked with SAP’s Customer Success organization and Cloud Success Services group on building the financial forecast model. Encouraged by the successful implementation of SAP IBP for demand, FBNZ is relying on SAP Services and Support offerings to facilitate its move toward a unified commercial planning platform based on SAP IBP.
Commercial Manager Export, Fonterra Brands (NZ) Ltd.
Improving accuracy, agility, and visibility across the supply chain
SAP IBP introduces real-time integration and data insights in the integrated business planning cycle at FBNZ, and the user-friendly interface allows the company to refine its forecasting and budgeting capabilities. The improved visibility across the supply chain, down to the individual location and product, lets the company create more-accurate demand forecasts using proportional factors for volume. This improves the precision in how the forecast is split between selling locations, so customers receive the products fresh and on time. It also enables FBNZ to build more-sustainable manufacturing processes, reducing the amount of excess or expired stock going to landfill. There’s a 20% reduction in short-dated dumps, resulting in cost savings and environmental benefits.
The integrated business planning team can refresh and analyze data from demand volume to standard gross margin at a much faster rate. The increased control in making mass changes saves roughly five hours per month. The cycle time to complete adjustments and review forecasts is halved, from two days to one day. The team can conduct detailed simulation and scenario planning, where the impact of changes is instant rather than overnight, increasing the agility of the planning and budgeting processes. This means staff can spend more time on value-adding tasks. Trust in the data is improved, as the integrated master and transactional data helps the team identify discrepancies while reducing the risk of errors and need for manual data maintenance.
The low-cost implementation was agile and successful, aided by the small team of experts and dedicated business users who delivered the outcomes. The user-friendly application and advanced simulation capabilities resulted in very positive employee adoption, increased cross-team collaboration, and better-quality financial forecasts. SAP IBP has helped future-proof FBNZ by greatly enhancing its ability to manage unexpected impacts on the supply chain. The solution contributes to informed, confident decision-making at a variety of business levels, allowing a focus on growth. Dedicated to continual improvement, including sustainability, the company plans to concentrate on supply planning while refining its demand processes.
General Manager Supply and Planning, Fonterra Brands (NZ) Ltd.
Featured partners
GoSCM believes that migrating to new and more advanced technologies is a requirement to be successful in the current world. It helps companies focus on business value, the implementation of best practices, and continuous improvement. The company has executed over 120 projects in more than 20 countries and 15 industries.
HCL Technologies Limited (HCLTech) supports companies in transforming their landscapes with applications, security, cloud, and infrastructure services. With over 2,000 patents driving innovation and powered by a global team of more than 221,000 people across 60 countries, it delivers smarter, better ways for all its stakeholders to benefit from technology.
Sysdoc Ltd. helps organizations successfully navigate complex change and transformation. Its approach is outcomes based, enabling organizations to transform with agility, cut complexity, and deliver simpler, smarter ways of working.