AmBev is Latin America’s largest beverage company.

The company has 49 beverage plants in Brazil alone, and it distributes its products to over 1 million points of sale throughout the country. Keeping all these outlets stocked is a mammoth operation. According to Tiago Rino, a demand planning specialist at AmBev, the company does not want to produce too much or too little, while simultaneously maximizing the distribution of its products.

In 2003, the company started using SAS, a leading business analytics software provider. The SAS forecasting solution used by AmBev combines historical data from company locations, including sales and distribution data for more than 180 products.

The software automatically analyzes the data and provides in-depth information on demand by connecting production levels, distribution plans and all other processes related to demand and replenishment planning. The results speak for themselves. According to Rino, product turnover (i.e. days held in inventory in a factory) has decreased by 50 per cent to 7–8 days. Production planning, distribution planning and sales forecasts have all improved too.

Questions 

1 How useful is the detailed demand planning information obtained from systems like SAS for the annual budgeting process?

2 Is an annual sales/demand budgeting process still necessary when such detailed and complex systems are in place?