Logility Value Chain Solutions Enables Market Forecasting
When Eastman Chemical Co. (Kingsport, Tenn., www.eastman.com) decided it needed a new way to do its market forecasting, officials were looking for software to help the company analyze all the market and sales data that goes into long-range planning. What the company created, however, was a new way of doing business that incorporates forecasting software, data warehousing and a global intranet.
Eastman is one of the world’s largest manufacturers of chemicals, fibers and plastics. "We were globalizing and putting in more plants around the world," Hewson says. "We recognized that we needed a world-class forecasting process."
Eastman started by purchasing a forecasting application from Logility Inc. known as the Logility Value Chain Solutions suite. In July 1997, the company began using Logility’s demand planning module on its Windows NT servers.
To use the software, a relatively small number of Eastman employees feed data into the Logility demand planning module from a number of databases. The bulk of the data is from a data warehouse that contains information from the company’s enterprise resource planning software, but data is also input from other sources. The data represents past orders placed for products, the numbers of units produced by factories and the number of orders anticipated for the coming years.
One of Eastman’s biggest products, for instance, is polyethylene terephthalate (PET), which is used in the injection molding of two-liter soda bottles. Hewson says that forecasting how much PET will be needed is difficult for two reasons: The market is growing by more than 10 percent a year, and the demand fluctuates seasonally with the amount of soft drinks consumed.
The Logility software helps account for these factors by analyzing data on past sales, market growth and Eastman’s manufacturing capacity. It creates a detailed forecast that predicts the demand that Eastman can expect for certain products in certain markets, and it tells the company what it will need to do to meet those demands.
Eastman employees and analysts log onto the corporate intranet and view the forecast with Internet Explorer. There, they can add to the forecast. "Most of the changes made at this level reflect knowledge that people have about an individual customer or individual market," Hewson explains. "If history shows that customer A in Indonesia has bought 500 units of product X every year for the past 15 years, the forecast software is going to predict that in the next year the customer is going to buy 500 units. But if the guy who calls on that customer just learned that the client doubled its capacity and will need 1,000 units next year, no piece of software would ever know that. That’s the local market and customer intelligence that we’re putting into the process."
Hewson says that Logility’s Voyager software, a component of the suite, gives users much more flexibility in viewing data than simple spreadsheets. The Voyager software allows users to change the appearance of the data in the software to suit their own needs. "One guy might want to forecast 15 different customers for one product, and the other guy might want to forecast 15 different products for one customer," he explains. "This software permits you to do both."
Logility Value Chain Solutions