New demand planning solution enables IBP at Perstorp

From S&OP to Integrated Business Planning

Perstorp is one of the world’s leading speciality chemicals companies. Founded in 1881 by Wilhelm Wendt in the small municipality of Perstorp in southern Sweden, the company has evolved into a global business with seven production units across Asia, Europe and North America serving a wide range of industries with sustainable solutions and products.

Perstorp’s success builds on a strong culture that promotes collaboration and transparency. The strategic use of integrated business planning (IBP) is a great example. The process sets the pace for the business and synchronizes sales and finance with production and logistics – ensuring everyone is working toward a common goal. It was also IBP that first brought Perstorp and Optimity together.

IBP – it’s only as good as your demand plan

In 2019, Perstorp had decided to expand its existing S&OP process with IBP. Katrin Åkerlindh, Director of Customer Demand Planning, recalls the challenge. “We needed a better forecast to support our new IBP process. I started by reading articles about IBP and demand planning to get fresh ideas. We then went on to document our existing and to-be demand planning processes. Quite a bit of effort went into this, but it was time well spent and helped us stay focused along the way.”

Perstorp decided to replace its annual budget with a rolling 12-month forecast to better support the company’s supply-side planners and financial controllers. Unfortunately, the existing demand planning system couldn’t support this move, so they had to look at alternatives.

Following a formal evaluation process, Perstorp selected Optimity’s demand planning solution. Katrin explains why it was an easy decision. “It came down to usability. Optimity is extremely strong in this area. The system does everything we need without the complexity of other solutions.”

Getting sales onboard

The new IBP process needed a demand plan that the business could unite around. Katrin used her sales, business development and operations experience to approach the challenge: “My starting point is always People, Process and Technology. All three have to harmonize, but I firmly believe People are the most important.”

Katrin realized that success would hinge on sales taking ownership of the forecast, so she involved them in the project from the outset. “Our sales reps are best placed to provide accurate numbers. We had to take advantage of that. At the same time, salespeople are pragmatic, and they will only put in the effort if they see value in it. The upside is that when they see that the business is working to their numbers, commitment comes automatically. This is why the user experience was our top priority. We have over 70 sales reps spread across the globe, so accessing information and making adjustments had to be easy. So far, we’re getting great feedback from the users. They love the simplicity. They have everything they need right at their fingertips.”

A new process

Katrin explains the planning process, “We have four business areas and a large product portfolio. Some of our demand is more or less steady, but we have many products with intermittent and erratic patterns. The reps are ultimately responsible for their own territory. They continuously review the coming 3-5 months and make adjustments when new information is available. Then, further out on the horizon, they can lean more on the Optimity’s statistical forecast.”

Katrin keeps the demand collaboration system open 24×7, so users can make adjustments when it suits their schedules and time zones. “Everything is monitored centrally. I have dashboards set up where I can straight away see if anything doesn’t look quite right and take action. The setup works for everyone.”, says Katrin.

100% digital implementation

Most of the project took place during the pandemic. However, Katrin was surprised by how well it all went despite the challenging circumstances. “The implementation was carried out 100% digitally. We used MS Teams, which suited Optimity’s iterative prototyping approach. It turned out to be a very agile process. The collaboration between our IT department and Optimity was excellent. It’s been an eye-opener in terms of running a project.”

From the very start of the project, Perstorp management gave the project team full autonomy to make decisions. Katrin explains the importance of this commitment, “The project was central to the greater IBP process, so our senior leadership was 100% behind it. This made everything much easier. We started in May 2021 and went live five months later, which is very good given the project’s scope and the size of our organization.”

Demand planning – from back-office to strategic function

Katrin has recently moved from the Financial business area to the Commercial Excellence team. The idea was to get closer to the customers. She explains how the IBP process has changed the role of demand planning. “Today, the business is looking at demand planning as a strategic function. This is a major shift for all of us on the team. We’re bringing more value to the business, and management recognizes that. It’s very encouraging!”

Time to settle

Katrin is not short of ideas for how customer demand planning can add more value to the business. However, she first wants the users to work with the system for a while. “We want to give the users some time with the system. This will give us better quality feedback. Any changes or refinements should be needs-driven.”

However, some ideas are already in motion. For example, the team plans to offer a more extended 5-6 year forecast to support the company’s strategic planning. “We want to use supply chain optimization technology for our strategic planning, but this requires a longer-term outlook for our unconstrained demand. Optimization has huge potential and can help us plan our growth, evaluate risks, perform sensitivity simulations and support key investment decisions. It’s an inspiring time.” says Katrin.

A word of advice

When we ask Katrin what advice she would give to companies in a similar position, she highlights the importance of management buy-in and getting people involved. “If management is 100% behind the project, everything is more straightforward. There’s no waiting for decisions. You can control everything within the project. It’s a huge time saver. “

She also points out the importance of involving those impacted by the new process. “For us, this meant getting the sales reps, production planners and owners of the central data warehouse onboard. Add an experienced project manager, and you have set yourself up for success.”

Her last piece of advice is to maximize the use of standard functionality. “This makes things a lot easier going forward. We made a conscious decision not to modify the system unless absolutely necessary. I’m happy to say we’ve ended up with an almost completely standard installation. We run Optimity in the cloud and on a subscription basis, so we don’t have to worry about upgrades and new releases. We get all the benefits at minimum cost and with zero hassle.”

About Perstorp

The Perstorp Group is a world leader in several sectors of the speciality chemicals market providing chemicals for plastic materials, resins and coatings, synthetic lubricants and engineered fluids, complementary chemicals, animal nutrition, and pro-environment solutions.