Growth through acquisitions meant fragmented systems and operations.
Evolving markets and customer needs
Siloed operations also meant lack of agility, longer cash conversion cycles and higher inventory carrying costs.
Poor supply chain visibility
In attempting to consolidate systems, data gaps and inaccuracies became apparent, as well as pools of un-optimized inventory across business units.
Sensient Colors Gains Visibility and Optimizes Inventory
Demand planners now prepare more accurate forecasts that determine demand and track variability. Outside suppliers contribute lead-time variability while business units provide internal timelines, batch sizes, costs and other information to optimize safety-stock targets. From there, replenishment plans are generated to meet anticipated customer needs and service level goals. Logility also forecasts dependent demand because finished goods often serve as raw material for other products.
Due to the increased visibility, synchronized plans and cross-functional collaboration, Sensient Colors now has significantly improved inventory investments and service goals. “With Logility we have created a robust set of new business practices and processes to drive marketing intelligence, S&OP and supply decisions,” said Gian Leocata, global inventory optimization manager at Sensient Colors. “We know what we have in inventory and where we have it. That is a huge advantage in the marketplace.”
In the first 18 months, Sensient Colors reduced its U.S. division’s food color inventory by more than $6 million. Forecast accuracy also improved significantly. “We’re better managing our inventory and forecast. Not only are we doing things better, we are doing the right things,” Leocata explains.
Sensient Colors can now segment its products as part of the planning and optimization process to better understand its inventory composition. Of its 5,000 SKU active food color portfolio, more than 3,000 are considered low volume, contributing about one percent volume. Managers now understand the complexity of the SKU mix and can make more informed business decisions faster.
Logility has enabled Sensient Colors to administer new processes that have positively affected the entire global business. Planners gain insights in minutes instead of weeks, enabling them to spend time analyzing the data—creating multiple scenarios to model demand ranges along with inventory and supply options. “This reallocation of time adds a ton of value to our business every day,” Leocata says. “You don’t need to work harder when you can work smarter.”
Additionally, Logility helps Sensient Colors identify new insights and actions to drive key decisions based on actual business conditions. Examples include recommending inventory levels to match target service levels, holding back production at intermediate or bulk levels, and understanding how demand variability will impact lead time.