Keeping cool with unified sales and operations planning

Daikin Comfort provides HVAC technologies, including smart home and clean comfort solutions as well as environmentally friendly refrigerants. With its focus on efficient and sustainable climate control for residential, commercial, and industrial customers, Daikin Comfort has seen impressive growth in its North American operations.  

Growth, however, often brings additional complexity, especially for manufacturers and other companies managing extensive supply chains. As Daikin Comfort expanded, its teams were tracking 10x the number of SKUs they had in recent years while continuing to use tools and processes more suited to a smaller business.  

Leadership saw this as an opportunity to modernize sales and operations planning (S&OP) while also creating a better experience for customers. Daikin Comfort had already worked with Slalom on numerous projects, so a collaboration to optimize S&OP landed squarely in everyone’s comfort zone.

Daikin Comfort’s primary hurdle was a disconnected planning environment. The company’s four key groups—sales, logistics, manufacturing, and supply chain management (SCM)—managed their respective areas individually. “Every group had its own manual spreadsheet,” says Billy Shipley, senior vice president finance, CFO at Daikin Comfort. “Sales would take its spreadsheet and send it to SCM. SCM would load that into a giant 8,000-row file and then pass it on to manufacturing. But once you pass a spreadsheet on, it’s already old.”

This lack of real-time visibility led to firefighting and heroics from team members who often had to reconcile conflicting data and update short-term production plans. Without a single source of truth, the organization found it difficult to plan effectively beyond a few weeks, leading to excess inventory and potential delays in fulfilling customer orders. 

Slalom partnered with Daikin Comfort to move from a reactive execution model to a proactive, integrated planning process. Slalom team members, many of whom are former industry practitioners, worked closely with Daikin Comfort leaders to bridge cultural differences and align the organization around common goals.

To automate and sustain the new processes, the team used Anaplan as the central technology platform. By consolidating data from across the business, Daikin Comfort established a single source of truth that allows for real-time collaboration. 

One of the most impactful changes was the move to consensus demand. Instead of building inventory based on static annual budgets, SCM, sales, and manufacturing now collaborate to challenge assumptions and align on what the market will actually tolerate.

The team used the forecast outputs from Daikin Comfort’s existing AI tools to establish a baseline for the S&OP community and inject +/- building blocks (inputs from market intelligence, sales and pricing strategy, and assumptions) to drive the most up-to-date demand signal. Enrique Ervesun, a director at Slalom, explains the forecast value-add KPI we introduced to Daikin Comfort: “If the statistical models, machine learning, and AI create a baseline that’s 95% accurate, then the teams know they don’t need further adjustments. For products that have a forecast value add that’s extremely negative, they have to dig deeper and find out what the problems are.”

So far, this approach is yielding impressive results. “Last month our forecast was 15% better from the efforts we’ve made and having sales work with the AI tool,” says Shipley.

The transformation has significantly improved Daikin Comfort’s operational efficiency and financial health. By aligning production with true market demand, the company has already reduced its inventory by 10%, with a plan to reach a 30% total reduction by next year.

The impact extends directly to Daikin Comfort’s customers through improved order fulfillment. With better visibility into inventory targets and production plans, the company can deliver the right products in the right place at the right time. “Now manufacturing, logistics, sales, and SCM can all collaborate on the budget,” Shipley notes. “We’re challenging each other and building a much better consensus demand. It’s been huge.”

Beyond the metrics, the project has empowered team members and reduced the stress of the planning cycle. Executive update meetings that used to involve last-minute adjustments and uncertainty are now streamlined reviews of accurate, pre-validated data.

“The really cool thing about this project is that, for supply chain management, we have one source of truth,” concludes Shipley. “We have everything sitting in the same spot. Even though every entity has its own objectives, we can see everything in one place.”

Reflecting on the partnership, Shipley shares, “Slalom’s been a great partner. This project was very, very complex, and they've just been great with all the detail and intricacies.”

With the success of the North American transformation, Daikin now has the opportunity to use it as a blueprint for its other locations across the world, leaving the company even better positioned to build on its leadership in the HVAC industry for years to come.