Current process review (20.12.21)

Objective: Is there a business case?

Demand Company overview

• Main competitor: TetraPack but more premium than

• Product portfolio:
  1. Sleeves: customer just needs to close bottom and top
     1. Key raw materials: (A products): polymer, carton, aluminum
  2. Spouts: Lids on each packaging
     1. Raw materials: polymers in pallets
     2. Mentioned by Rainer has possible

• Machines for filling: Machines are aligned to the sleeves and spouts; Machines are fully automised from pallets to filling, incl. customer service

Demand planning

• How is forecasting being done?

• Sales forecast
  • Done not on printed yet (so not final product) —> basically on white sleeve used by 150
  • Based on Master plan from Excel that contains info on product lifecycle per customer
  • To be confirmed: Historic demand with adjustment by sales
  • Critical forecast period: 18 months
  • No customer forecast because there are so many customers
  • Forecast is done on Sleeves instead of KG or M3

• Product lifecycle: Sleeves are running in average 3 years (max. 3 years of historic demand for specific products, very dependent on customer specification)

• 🚨 Current Forecast Accuracy 65% for following months (aggregated level)

• SIG has not visibility what inventory at customer stock level

• Example for challenges
  • Saudi Arabia, there was a bonus system
  • Customers are reacting to price increases in next year and order whatever they want
  • Suddenly Asian market asked for much more small packages instead of big packages

  —> “Whenever we thought we could predict something, we were proven wrong.”

  • Big Asian customer suddenly decreased forecast 30%
  • Starbucks suddenly placed massive order

Stock management

Stock buffers?

• Currently down to 1 week of stock

Uncertainty factors?

What is the problem?

Supply planning

General

• Carton board supply
  • SIG closed its own carton board factory because it was to heavy from investment
  • Supplier changes take 6-12 months because suppliers have to be qualified by customers —> SIG is unable to do emergency orders from secondary supplier
  • Carton board is hard to source (high e-module, hygienic standards), only specific suppliers able to deliver this; currently based on Sweden, Brazil and China
  • Currently capacity constraints —> since last year big issue, normally they are able to product 1t per day (SIG needs 400 000 t per year); Capacity for SIG at the supplier is already fixed for 2022/2023
  • Long lead times because shipments are done via ships (multiple months)
  • “We use all capacity we get from our suppliers” —> CTO asked to order whatever is available
  • Fixed lead time 3 weeks advance what can be produced —> but then you had

• Aluminum
  • Heavy capacity constraints due to global demand → currently impossible to build up safety stock
  • Similar situation to Carton board
  • “We use all capacity we get from our suppliers”

• Polymers
  • European market is handled as JIT with supplier managed fill-up based on —> less problematic in terms of stock management (suppliers
  • SIG owns stock in central storage
  • Partly
  • “We ALMOST use all capacity we get from our suppliers”

  —> Supply not a problem for Polymers (only some products due to capacity constraint), biggest problem is the long delivery time (to be considered temporary)

Digitization

• Current approach: We first need to collect all as much data as possible in the Data Warehouse

• Challenges:
  • Currently no open orders + demand in Data Warehouse
  • Only one person at IT that works on Data Warehouse, totally overloaded
  • Currently no discipline in updating confirmed delivery dates from supplier

• 🚨 Next year Spouts to be planned with Quintiq —> hard to make space for Flowlity

Conclusion:

• “I consider you as very strong”

• “I am currently not seeing buy-in internally for a project like this”