A Major Canadian Brewery Reduces Inventory Costs 50% with SmartForecasts and Oracle

A doubling of inventory turns and a near-50% reduction in inventory carrying costs over two years aren't tough to swallow-especially if you're a leader in global beer markets.

The company is a major North American brewery that employs 3,800 people and makes 60 different types of beer. According to this company's Manager of Marketing Planning (MMP), the company's demand forecasting system, which integrates SmartForecasts Enterprise with Oracle Corporation's Oracle Express OLAP (online analytical processing) system, is the source of much of the productivity gain. "Our forecasting system," he says, "gives us the best of both (forecasting and database management) worlds."

The company has been able to reduce its inventory and production costs by improving the accuracy of its product demand forecasts. Indeed, sales seasonality, rigorous customer service requirements, and the growing need to anticipate the financial impacts of new-product introductions, discounting and sales promotions constitute a complex planning mix.

Replacing a slower, less accurate forecasting system, the company integrated SmartForecasts with Oracle Express, a powerful platform for multidimensional database management and data analysis. The system runs on Windows NT workstations and the results, says the MMP, are "remarkable."

Accurate forecasts in only 20 minutes
Production forecasts are generated weekly. About 14,000 time series of SKU sales by territory are sent from the company's Oracle relational database to the Oracle Express analytical database, then fed into SmartForecasts Enterprise. SmartForecasts selects the best statistical forecasting method for each time series and automatically generates the forecasts in report and graphical form. Oracle Express then reads the forecast file and sends the data into Oracle Express "objects" where the data are aggregated, visualized and manipulated as higher-level entities, such as brand forecasts and revenue forecasts over regions. These higher-level aggregates are adjusted, if necessary, and the final forecast results become the operating forecast for the current planning cycle.

"Forecasting our 14,000 items with SmartForecasts takes only 20 minutes. We just submit the job and have a coffee," says the MMP. "The system is that robust and reliable."

Smart & Oracle forecasting solutions
According to the MMP, Oracle Express allows quick and powerful manipulation of the forecast data at low (SKU) and higher (e.g., brand) levels in the product hierarchy. SmartForecasts' synchronized window displays permit the simultaneous viewing of product demand history, forecast graphs and reports for interactive, on-screen adjustment of forecast results.

In addition, SmartForecasts' enhanced event-modeling capability allows company analysts to quantify -for each SKU in their database- the impact of past promotions and events that may happen again in the future. And the software's ability to forecast service level inventory requirements-which optimize safety stocks and thereby identify the minimal levels of inventory that must be maintained to satisfy demand over a future lead time-has helped the planning team achieve such a major reduction in inventory costs.

New additions to SmartForecasts' technology toolbox continue to add value. Direct database connectivity to relational tables in Oracle is expected to speed the initial forecasting process. OLAP-based, multidimensional Data Filtering allows planners to select subsets of items for analysis based on any descriptive or numerical criteria. And SmartForecasts' versatile Send To function promotes collaborative forecasting throughout the organization by allowing users to easily attach forecast graphs and reports to e-mail messages.

According to the MMP, the company is so impressed with the Smart/Oracle forecasting system and the quality of business information it provides that "if it was a beverage, we'd bottle it!"

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