External collaboration in demand planning – A still distant reality for most Brazilian companies

Research coordinated and carried out by ILOS, with support from Technological Magazine, from CSCMP, University of Arkansas, BVL and the Technical University of Berlin, with 105 companies in Brazil, USA and Germany on the Supply Chain Planning shows that, although we are still behind the USA and Germany, many Brazilian companies have advanced in the use of quantitative sales forecasting techniques and in collaboration between organizational areas, but the evolution has been small in terms of integration with customers and suppliers.

Regarding the use of quantitative sales forecasting techniques, our previous survey from 2010, showed that 21% of large Brazilian companies used more sophisticated statistical methods to carry out their sales forecast, a percentage that “jumped”, in this survey, to 53%. Despite being a significant evolution, it means that almost 50% of large Brazilian companies still make their sales estimates using averages or based on the tacit knowledge of their commercial specialists. It's a bad result!

With regard to the existence of the S&OP process, the number of companies that declared to have a formalized process increased from 62% to 75% of the sample between 2010 and 2015, an evolution that was also significant, bringing the Brazilian result closer to the German one (78% of the companies have S&OP) and decreasing the difference for the American (87% of companies have S&OP).

However, it is in the use of external integration mechanisms, such as the Vendor Managed Inventory (VMI) and Collaborative Planning, Forecasting and Replenishment (CPFR), that the comparison of Brazilian practices with those of other countries is quite impaired, as can be seen in Figure 1.

Figure 1 – External Collaboration in Demand Planning

Source: Panorama ILOS – Supply Chain Planning 2015

While VMI is a reality in Germany, with almost 90% of companies stating that they use the practice with customers and suppliers, and in the USA, with almost 80% of companies, in Brazil only 40% of large companies claim to have some VMI initiative . The same result is repeated in relation to the CPFR, an initiative present in 94% of the American companies interviewed and in 62% of the German companies, against only 40% in the Brazilian companies.

These results unequivocally illustrate the opportunities we still have to evolve in the planning process in the Supply Chain. Certainly, we have made progress on internal issues, but there are still important gaps to be filled, and we will need to advance a lot in external integration if we want to enable the companies operating here to participate in global supply chains.

Reference

<https://ilos.com.br/web/analise-de-mercado/relatorios-de-pesquisa/planejamento-no-supply-chain/>