With the help of the project, Leggett & Platt over the past three years has generated more than $1 billion in cash from operations.
Standard S&OP process helps manufacturer evolve its supply chain
In 2008, when the housing bubble and financial crisis hit and undermined the global economy, Leggett & Platt, like a lot of manufacturing companies, found itself facing a potent one-two punch: unprecedented demand volatility, coupled with increasing competition from lower-cost countries.
To optimize business performance, Leggett & Platt set out to increase product differentiation, smooth demand variability, and boost profi tability.
The manufacturer of a variety of engineered components for residential, retail, and industrial markets launched a supply chain improvement initiative intended to help the company better understand long-term demand, as well as create better cost and pricing models and fi nancial projections.
At the heart of Leggett & Platt’s project was a standard sales and operations planning (S&OP) process that the company implemented using Oracle’s Demantra system integrated with Oracle MRP. The system allowed Leggett & Platt to better manage working capital and cash fl ow while eliminating an unproductive annual budgeting process.
With the help of the project, Leggett & Platt over the past three years has generated more than $1 billion in cash from operations and improved EBIT margins by 180 basis points; the company’s total shareholder return has placed it in the top 10% of the S&P 500.
The project earned Leggett & Platt a PM100 Award in the Supply Network Mastery category.
Leggett & Platt built a global supply chain platform that integrates manufacturing, materials, inventory, supply, and financial management using a host of Oracle applications including PeopleSoft, Flow Manufacturing, and Hyperion.
The Supply Chain Initiative was designed to ensure that supply chain performance would contribute to profi table annual growth. The Oracle application architecture allowed the company to build on top of its legacy systems with new applications that bring in new functionality, new capabilities, and a quantifiable return on investment.
Explains Randall Wood, staff VP of Leggett & Platt’s Business System Office, “Our S&OP process, based on the Oliver Wight Integrated Business Management model and supported with Oracle’s Demantra and Hyperion Planning, is a key element in fully developing and leveraging our global supply chain as a competitive advantage.”