Yogurt maker stirs in SAP to boost its demand planning capability

In 1919, Isaac Carasso was on a mission. Using cultures from the Pasteur Institute, he created yogurt to help improve the health of children with gut issues in Barcelona. At that time, yogurt was not widely known in the region as a food item. Instead, he sold his product as a medicine to pharmacies. 

Over the years, Carasso’s mission turned into a global, diversified business named Danone that today offers products such as yogurt, soy milk, water, and early life and medical nutrition to consumers in more than 120 countries. Danone brands include Activia®, Dannon®, Light & Fit®, and Oikos® yogurt, Silk®, Evian®, and Aqua®.

In the company’s words, “For a century, we’ve been faithful to the original purpose, selling healthy, delicious products tailored to the nutritional needs and eating habits of our consumers.” And while Danone is succeeding in “nourishing people and helping them take care of their health,” one area of the business needed a health boost that Carasso’s “medicine” was not designed to treat: demand planning.

More than 120 ‘flavors’ to handle

When your company is dealing with today’s volatile market, a variety of products, and a supply chain covering 120+ countries – each with its own rules and processes – demand planning, including forecasting, can get a bit gut-wrenching. And that’s especially true if you’re using manual processes to gather data from your diverse, complex, and often siloed ecosystem to do the planning/forecasting. 

Such was the case with Danone.

A change in culture

Danone wanted to respond faster and more efficiently to market changes and enhance customer satisfaction. And a large part of reaching that goal centered on having healthy demand planning/forecasting processes. Yet, its existing processes were hampered by the company’s legacy manual solutions and systems. So, the company put together its wish list, including the ability to:

• Align and standardize the planning processes, tools, and data between business units, product categories, regions, and countries
• Strengthen the planning process by implementing a proactive, end-to-end, customer- and consumer-centric supply chain solution across its operations
• Eliminate manual data input and automate data integration
• Improve visibility across the chain and ecosystem

Stirring in the secret ingredient: SAP IBP

Working with SAP and partner SAPTOOLS, Danone implemented a solution featuring SAP Integrated Business Planning (IBP) for Supply Chain that incorporates machine learning (ML). As a result, the company was able to check off that wish list.

By automating and standardizing data input and integration and achieving an end-to-end view of its supply chain, the company has been able to predict and plan for potential disruptions or events more effectively. Improved forecasting has helped boost inventory management, minimize the risk of stockouts or overstocking, and reduce waste related to inefficiencies. 

Automating the manual processes has saved demand planners lots of time and freed them up to focus on more productive critical-thinking tasks, such as managing exceptions and reviewing portfolio performance, increasing their value throughout the organization. 

According to Danone’s demand planning manager in Italy, while SAP IBP offers advanced technology, the manager’s group has found the solution easy to use, which has helped increase the group’s productivity. “As a result, doing cleaning, analysis, and manual adjustments is much easier and faster today than it used to be. Furthermore, the ML for the dairy and plant-based business is achieving an extremely high level of accuracy, making users confident to work with alerts and exceptions. This has the double advantage of not only providing accurate forecasting but also saving time to focus on other strategic tasks.”

‘Package facts’

Currently, 42% of Danone demand planning is handled in SAP IBP. That works out to more than 660 million forecasts generated weekly with the solution. Danone has reduced the time to generate forecasts by 40x and increased forecast accuracy. The company has also achieved in some countries a waste reduction of finished goods in the dairy products category of 35%.

An award-winning culture

For its achievements, Dannon received an Honorable Mention in the 2023 SAP Innovation Awards, now in its 10^th year. To get a bigger taste of what makes Danone an innovation leader, check out the company’s 2023 entry pitch deck.