Logility and Heineken HOP to It

Situation: Heineken recognized the need to efficiently process sales forecasts and orders. As a global company, Heineken traditionally had a long lead time in getting forecasts in and product distributed throughout the United States and the world. The objective was to reduce the time between when an order is placed to when it is delivered from 10 to 12 weeks to between four and six weeks. In late 1995, Heineken decided to implement a supply chain management system to replace the old way of dealing with
distributors.

Process: Heineken decided to implement an “extranet,” a private network connecting Heineken to customers and/or suppliers using Internet technology, based on Logility Voyager Solutions and in particular, Logility’s CPFR-compliant Voyager XPS. The system can also be used as an intranet, connecting salespeople to the central database. Calling the system HOPS (Heineken Operational Planning System), Heineken can do real-time forecasting, replenishment, and ordering interaction with its distributors. Through Voyager XPS, Heineken can deliver customized forecasting data to distributors through individual Web pages. “We’re the first company in the beer business to do planning and forecasting on the Internet,” said Dan Tearno, a vice president at White Plains, N.Y.–based Heineken.

Distributors log on to the customized Web pages using a standard browser and Internet connection. Once they enter their ID and password, they can view their sales forecast, modify their order, and submit their order by pressing a button. Order submissions are available real time at the Heineken brewery in Europe, which can, in turn, adjust its brewing and ship-
ment schedules.

Results: Voyager XPS provides a calendar so Heineken can notify distributors of events. Capitalizing on this “push paradigm,” e-mail can also be tapped to send out broadcasts of problems, new products, or newsletters. Other benefits of online collaborative planning are lower procurement costs, smaller inventories, and shorter cycle times.
Heineken USA’s collaborative planning has reduced order cycle times from three months to four weeks and simplified planning for its distributor customers.

“Because we have reduced lead time, we can produce the beer closer to the time when we will need to deliver it, so the customer will get fresher beer,” said Thomas. The results are reduced inventory levels and fresher product to consumers.

“We anticipated payback within half a year, and we got it,” said Thomas. The system has been rolled out to all 450 Heineken distributors in North America. Heineken has also achieved a 15 percent reduction in forecasting errors coupled with a 20 percent increase in sales.