Customer Stories
The consumer electronics industry, has complex supply chains and consumer-driven market dynamics. Manufacturers must find the ability to adapt to quick changes in the market, due to rapid technological evolution, fluctuating costs, and high demand volatility.
This is the story of Vestel, one of Europe’s manufacturing giants, specializing in consumer electronics, domestic appliances, professional displays, IoT solutions and EV chargers. Founded in 1984 in Turkey, Vestel has rown into a world-renowned technology conglomerate consisting of 27 companies, over 19000 employees, an annual turnover of over USD 4 Billion, and an export network spanning 158 countries.
Vestel City - which comprises nine production plants established over an area of 1.3 million sqm in Manisa, Turkey with an annual production capacity of 35 million devices, 18 million television sets, and 10.9 million home appliances – is one of the largest industrial complexes in the world. Vestel also has R&D facilities located in Manisa, Istanbul, the UK, and China, where the manufacturer’s team of world-class engineers develop cutting-edge hardware and software solutions for its products.
To successfully operate a massive production and distribution network and to deliver high-quality products to an ever-expanding customer base worldwide is a formidable challenge. Vestel needed to optimize its supply chain planning, decision making, and operations. And therefore, they decided to seek an integrated S&OP solution.
To achieve supply chain optimization, Vestel has worked extensively with ICRON, a leading provider of Optimized Decision Making and Supply Chain Optimization solutions. The two companies have a business relationship that stretches back to 1999, when Vestel first implemented ICRON’s Detailed Scheduling solution at its production plants.
Vestel continued to use ICRON Detailed Scheduling for many years, but over time the manufacturer’s supply chain simply became too complex – involving too many products, components, constraints, and constantly changing demand signals – to handle using only that solution, along with SAP and Excel. Vestel decided that it needed an integrated sales and operations planning (S&OP) solution, and for this the electronics manufacturing giant turned to ICRON.
Challenges
Like many other major manufacturing companies, Vestel was facing a significant S&OP challenge due to the complexities of its supply chain.
Here are some of the key elements of Vestel’s unique planning predicament:
Vestel possesses a wide and diverse product portfolio that changes continually along with the latest technological advancements and market trends. Furthermore, the company offers a wide range of customization options to cater to customer demands in terms of order quantity, due date, and product specifications. Given the difficulty in generating a long-term operations plan in such a dynamic operating environment, Vestel needed to implement a robust S&OP solution that enabled ongoing responsiveness and seamless collaboration between its Sales & Marketing, Procurement, Manufacturing, and R&D departments.
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Although Vestel is strategically located in close proximity to the bulk of its customers in Europe, it is far away from its network of suppliers, which are primarily based in Asia. To balance supply and demand and reduce costs in this globalized business landscape, Vestel must manage long lead times in material procurement and engender greater integration and flexibility in its S&OP process.
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Vestel’s planning experts were manually executing the S&OP process, attempting to manage all constraints and decision variables through numerous interlinked Excel spreadsheets and data extracted from SAP, the company’s enterprise resource planning (ERP) system. This old-fashioned method of planning was time-consuming, often taking one to two weeks to create a feasible plan and update SAP manually, and it was prone to human errors. Even after identifying mistakes, it would take more than a day to fully correct them. The overwhelming amount of data involved made it nearly impossible for planners to have the visibility necessary to reconcile sales forecasts with fresh data on new customer orders and resolve inconsistencies. As a result, the S&OP plan could only be updated every two weeks or sometimes even once a month, severely limiting the team’s agility and ability to make timely decisions and take action.
Facing these challenges, Vestel was looking for an automated planning system that would enable the company to gain greater visibility and flexibility across its supply chain, foster increased integration and collaboration throughout its operations, and boost its overall productivity and profitability. And to provide the solution to its S&OP problems, Vestel engaged ICRON.
ICRON Solutions & Results
To help Vestel attain a highly flexible, integrated, and automated S&OP process, ICRON S&OP was implemented with some customer-specific modeling. The solution for Vestel was developed, tested and integrated with their existing ERP system. It was implemented over six months and was immediately fully operational. ICRON revolutionized and optimized Vestel’s S&OP process and empowered its planners by equipping them with enhanced supply chain visibility and the capability to:
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Swift generation of optimal plans to satisfy sales forecasts and customer demands, minimize costs, and meet operational constraints.
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Automatically revise plans to align with customer orders and resolve supply and demand imbalances.
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Identify inconsistencies in sales forecasts, realized customer orders, supply constraints, R&D plans, and managerial goals.
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Archive and compare previous plans to facilitate the analysis of discrepancies between forecasts and realized customer orders.
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Choose among alternative plans that can satisfy given goals and constraints to increase operational efficiency and reduce costs.
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Perform scenario analysis on forecasts, procurement capability, and production capacity
Vestel has continued to use the ICRON S&OP ever since it went live in 2011, and the system has yielded tremendous, tangible benefits for the consumer electronics manufacturer
Here’s a look at the most noteworthy benefits in this case
- Increased planning accuracy by 20%.
- Reduced inventory levels by 5%.
- Reduced synchronization time between sales and operations from two weeks to one day.
- Enhanced efficiency, communication, and synergy across the organization.
- Increased data visibility and improved data accuracy.
- Cut planning time by more than 50%.
“Before ICRON, it used to take us weeks to make a plan, but now we can generate a plan in a matter of hours or even minutes. ICRON is a powerful and agile planning platform that is capable of handling the complexity and constraints of our supply chain. ICRON serves as the single source of truth in our organization. Now, planners from different departments are using ICRON to manage their daily operations. When they open ICRON, they gain visibility over their operations and are able to access plans, data, and insights that they can rely on.”
Ender Yüksel
General Manager - Vestel Elektronik
Results
ICRON S&OP has proved to be a powerful tool for Vestel Electronics, enabling the television manufacturing giant to overcome its S&OP challenges, visualize and optimize its supply chain operations, and achieve increased flexibility, efficiency, and profitability.
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Increased efficiency in the S&OP process
ICRON reduced the synchronization time between Vestel’s sales and operations from two weeks to one day. By serving as the “single source of truth” regarding the S&OP process for all stakeholders (including Executive Management, Sales & Marketing, Manufacturing, Procurement, and R&D), ICRON S&OP provided a collaborative decision-making framework within Vestel, driving greater efficiency, communication, and synergy throughout the organization. -
Improvement in planning accuracy
With ICRON, Vestel’s plans are 20% more accurate. By replacing manual planning processes previously used by Vestel planners with a high-powered optimization model that consistently generates the optimal solution, ICRON S&OP was able to deliver significant improvements in planning accuracy. The discrepancy between initial planning materials assignments and actual production has decreased by 20% since the ICRON solution was deployed. The ICRON S&OP has enabled Vestel to more effectively keep supply and demand in balance and achieve greater synchronization along its entire supply chain. -
Reduction in inventory levels
ICRON has enabled Vestel to decrease its inventory levels – for the materials controlled by the ICRON platform – by 5%. By automatically adjusting plans in real-time based on up-to-date information on realized orders and sales forecasts, ICRON S&OP has reduced the synchronization time between Vestel’s sales and operations from two weeks to one day, resulting in an approximately 5% decrease in the inventory levels of components that have long lead times – and ultimately leading to reduced costs and increased profits. -
Greater visibility and control across the supply chain
With ICRON, it became possible for Vestel’s planning experts to present up-to-date and accurate data to all stakeholders in a unified and consistent format. This increased data visibility, combined with improvements in data accuracy obtained by automated validation algorithms, allows guidance of sales efforts, identifies procurement problems before they become apparent, and facilitates ad-hoc analysis of deviations between sales forecasts and realized customer orders. -
Reduction in planning time
With ICRON, Vestel has been able to cut its planning time by more than 50%. Before the implementation of ICRON S&OP platform, planners had to manually create and revise plans, a painstaking process that could take days to complete. With the new ICRON system, optimal plans can be automatically generated and revised to align automatically with realized customer orders and production operations in a matter of hours, thus dramatically decreasing planning time.
