Summer, sun and….ICE CREAM!
I have to say that I was very lucky to be able to grow up in California where the sun was always (ok…almost always) shining. Before moving to Germany, I could never understand why my German girlfriend (today my wife) was always itching to spend time outdoors during her visits to California. After 4 years living in some of the cloudiest regions in Germany, I get it. If the sun is shining here in Aachen, for example, you can bet that at least 80% of the Germans will be somewhere outside eating an ice cream.
The ice cream market in Germany is subject to seasonality, huge product ranges, fluctuating raw material prices and stringent legal regulations making it more sensitive than any other European country. I can personally attest to the aspect of seasonality. Last year, summer in Germany was basically non-existent. Social Media was abuzz as cries for summer could be heard across the country:
One can only imagine how the low temperatures and rain-filled days impacted the ice cream market. It is safe to say that in such a dynamic environment filled with uncertainty, planning for demand can be quite a challenge. Despite fluctuating weather patterns, overall demand for ice cream in Germany has been increasing since the mid-90s and customer demand for new flavors and market concepts have been rising with it.
One company that has been able to master the demand planning challenge is R&R Ice Cream, the largest company producing and distributing trademark ice cream in Europe. The company produces 1,000 different items, 30 percent of which are distributed to other European countries as well as other plants of the R&R Group. The cross-country trade brings about further challenges to the demand planning process as customers in the UK, France and Poland prefer different flavors and preparations, creating demand for a wide range of raw materials for the production process.. The complexity of the ice cream market can truly be seen when the operations of R&R ice cream are examined.
Within its demand planning process, R&R ice cream uses so-called phase-in plans. This means that some of the seasonal items are produced weeks, or even months before the acute summer sales phase. This helps secure item availability. During the major sales period, the company uses daily sales forecasts for individual items in order to adjust the sales and production plans, if need be. Finally the phase-out planning is aimed at avoiding an overstock situation for items that would likely not be sold the following year.
The success of their planning process lies heavily on the ability to produce accurate demand forecasts. For this reason, in 2006, R&R Ice Cream began implementing smart forecast analytics in their operations, which have allowed for quick, flexible and clear demand planning.
I encourage you to request a copy of the R&R Demand Planning Success Story and read about how the company has been using smart forecasts to stay on top of demand.