Bedoukian Research, Inc., located in Danbury, Connecticut, is a specialized process manufacturer producing high quality ingredients used in flavors and fragrances for customers worldwide. Bedoukian makes 350 specialty chemicals, in small batches, from 2000 raw materials. In addition, the company manufactures fifty insect pheromones used to attract and control insect pests, and resells 100 other products. Two-thirds of its products have hard-to-forecast, intermittent demand.
A Smart Software customer since 1987, Bedoukian Research not only uses SmartForecasts to forecast products with normal demand, but became an early adopter of SmartForecasts intermittent demand forecasting technology.
The Challenge
Many of Bedoukian’s raw materials are sourced in Asia, and are shipped by sea. Lead times can run 2-3 months and affect equipment usage and the company’s ability to meet the company’s high customer service level expectations. Many of the company’s products are built-to-order, and the same raw material might be a component in numerous products. When an ingredient is out-of-stock, it can lead to expensive emergency shipments or lost sales. In addition, Bedoukian’s planning process must account for product shelf lives and changes in commodity pricing.
To achieve high customer service goals, the company needed a solution that would provide accurate stocking level estimates for all of its products, including those with intermittent demand.
The Solution
Bedoukian uses SmartForecasts integrated with Chameleon, an ERP system specifically designed for chemical manufacturers.
Each month, SmartForecasts forecasts the demand for every finished goods item four months into the future, and estimates optimal inventory stocking levels for its raw materials too. The company plans to be one of the first users of Smart Software’s “Bill-of-Materials” forecasting capabilities that should simplify the planning process across product lines, while ensuring that its standard costs keep pace with the escalating costs of raw materials.
The Results
“The intermittent demand forecasting capability has been very useful,” claims Leona Eggleston, who leads the forecasting process. “We’ve gone from forecasting our slow-moving items by hand with poor results to automatically generating highly accurate stocking level estimates.”
In addition, SmartForecasts helps the company see the patterns in its product demand and better track sales performance. When buying patterns change, salespeople can swiftly take remedial action and avoid losing a customer’s business.
In the past five years, Bedoukian has been able to support increased sales with less inventory. While its sales increased 15%, finished goods inventory increased only 4% and raw materials inventory 5%. Additionally, it has improved its customer service by reducing late shipments to customers due to insufficient stock from 16% to 3%.
Improved planning has also enabled Bedoukian to consolidate ocean shipments for almost every raw material which decreases total freight expenses, and cuts down on emergency airfreight costs which saves over $1,000 for every drum.
Bob Bedoukian, president of the company, is more than satisfied and claims, “The more we use SmartForecasts, the more important it becomes for our business and the more efficiently our business runs.”
