Case Study – Tru-Test

Company Overview Tru-Test is a multinational company who designs and develops, manufactures and markets agritech solutions through an international distribution network. Annual Revenue $62 million Based in New Zealand, it has operations in Australia, Mexico, and the United States and employs more than 400 staff worldwide. The company sells its products in more than 70 countries and offers five distinct product categories: Electronic weighing systems Herd testing equipment for the dairy industry Wire and electric fencing Shearing products Brain monitors used in the healthcare industry.

Business Needs People: lack of accountability regarding which market manager owned any particular forecast. “It wasn’t my fault!” Tool: MS Excel + MS Access queries Process: Labor intensive -Poor DIFOT (Delivered in Full on Time) -Over-stocking, depending on the circumstances. -Poor DIFOT (Delivered in Full on Time) -Over-stocking, depending on the circumstances.

Project Goals Implement the Demantra toolset and business process that would facilitate more accurate demand planning in order to improve DIFOT and reduce inventory. How to achieve Providing an audit trail of changes to the demand plan to enforce accountability Enabling editing of the demand data at any level of aggregation to incorporate sales managers’ market and customer knowledge and improve demand planner productivity Provide greater visibility of the demand plan to the wider business to enhance understanding and operations planning (single souce of truth) Enable comparison against the sales budget (revenue and COGS) during demand planning Monitoring forecast accuracy, thus facilitating ownership and accountability for forecasts

Specific Requirements Time granularity in calendar months, with two years of history and a 12 month horizon, and the ability to view forecasts and actuals in a ‘year on year’ format Allow manual manipulation of the forecast (‘override’ or ‘uplift’-style) – in either units or sales dollars, having both options on the screen simultaneously, and a change in one automatically reflecting a change in the other View & modify forecasts in any of around 10 currencies (Tru-Test have a strong export business) Take snapshots of each monthly forecast, and monitor accuracy of any particular forecast, generally at the quarterly level. Review the value of the variance in ‘cost dollars’ Endorsement of the sales managers’ forecast by Demand Planning Manager Creation of workflows to govern the data load processes Publish the completed demand plan back to EnterpriseOne

Challenges Huge amount of data Tru-Test market about 5000 items to 6000 customers through multiple distribution centres. Thus there are many potential combinations. Forecast without history Managing new product and market introductions Irregular Demand Many items exhibit intermittent demand. Demantra has multiple methods that specifically deal with this problem, including Crostons, Intermittent Monte-Carlo, and Intermittent Regression models (ready for Phase II).

Implementations Issues Customer internal readiness Hardware Key user readiness Project time line Budgeted: 2 months + 45 days of OCS Delivery: Under Budget Tru-Test went live in April 2007.

Next Step Improve forecast accuracy by utilizing Demantra’s sophisticated Bayesian-Markov regression engine Reduce the burden on users. Minimise the number of combinations that users need to review through exception reporting.