Best Practice Demand Planning Discussion - Aricia€¦ · Best practice Demand Planning -Discussion Pressure to improve Demand Planning Implications of current economic climate Improving

© Copyright INFORM GmbH 1991-2007

Cathy HumphreysBusiness Development Manager UK

Best Practice Demand PlanningDiscussion


Best practice Demand Planning - Discussion

� Pressure to improve Demand Planning

� Implications of current economic climate

� Improving the Demand Planning process

� Statistical Forecasting and Market Knowledge

� Software tools support

� Customer/Supplier collaboration

� Sales & Operation Planning process

� Potential benefits by moving towards best practice.


� HQ: Aachen, Germany

� 350+ employees

� Advanced Optimization software for Supply Chain / Logistics decision support

� 700+ Customer installations globally

INstitute For Operations Research and Management GmbH


Transaction systemse.g. SAP, other ERP Systems,

Materials Management Systems, etc.

IT Infrastructure Databases / Network systems

e.g. DB/2, Oracle,Informix, Sybase

e.g. TCP/IP,UNIX, NT

Decision Support SystemsOptimization

Company Focus

INFORM supplies IT systems for intelligent decision support

based on advanced optimization technologies including fuzzy logic.


References out of more than 200 add*ONE customers

Automotive Aftermarket

Power-Tools












Implications of the Current Economic Climate

� Stay one step ahead = predictive & strategic

� Increased volatility / uncertainty of demand patterns

� Pressure on cost of agile/ responsive strategies

� External changes – competitors / market price

� Innovations / customer collaboration


Improving the Process

� Understanding your Demand and your portfolio





Orders Orders

VMI

ForecastsConstraint-based S&OP

Demand Visibility

Channel Sensing

Demand Shaping

Market Opportunity

Opportunity-based S&OP

Active Demand Translation

MRP

I II III IV

Reacting Anticipating Collaborating Orchestrating

Evolutionary stages of Demand Focus

Courtesy of


Responsive

The ability to respond to unforeseen changes in market demand (+/- 20%) for existing products

Differentiate on Availability

Agility

Effic

iency

Responsiv

eness

Time Cost

Production Schedule

Variance

FG Inventory

Order Cycle

Time

Perfect Order

Detail

Supplier Quality

Supplier On-Time

Purchase Costs

Dir MtlCosts

RMInv

Cost Detail

Production

Schedule Variance

Plant

Utilization

WIP & FG Inventory

Order Cycle

Time

Perfect Order Detail

AP ARInventory

Total

Cash-to-Cash

Demand

Forecast

SCM CostPerfect

Order

Supplier Quality

Supplier On-Time

Purchase

CostsDir MtlCosts

RM Inv

Cost Detail

Production

Schedule Variance

Plant

Utilization

WIP & FG Inventory

Order Cycle

Time


AP ARInventory

Total

Cash-to-Cash

Demand

Forecast

SCM CostPerfect

Order

Supplier Quality

Supplier On-Time

Purchase Costs

Dir MtlCosts

RM

Inv

Cost Detail

Production

Schedule Variance

Plant

Utilization

WIP & FG Inventory

Order Cycle

Time


AP ARInventory

Total

Cash-to-Cash

Demand

Forecast

SCM CostPerfect

Order

Efficient

The degree to which a system can minimise total delivered cost and waste

Differentiate on Total Landed Cost

Agile

The ability to adapt to changing market requirements related to new products and technologies

Differentiate on Adaptability

Aligning Metrics

Quality

Source: AMR Research


trendingtrending

Structural Structural interruptionsinterruptions

outliersoutliers

seasonal patternsseasonal patterns

Integrated Analysis

Demand Demand

Demand Demand

Time Time

Time Time






� Improving decision making and reducing risk



Multi-dimensional demand planning

..

..

..

..

..

..

regional structure

region

country

world assortment

commodity group

product

variant

product structure

customer

distribution

center

field store

key-account

area


Demand Planning process hierarchy

Valid plan

Forecast

Manual input sales department

Manual input central planner

80 90 90 100

100

80

100

80

90

80

90

100

Defined the process and authorisation for ONE plan


Combined planning view


Difference Analysis


C

B

A

X Y Z

Forecastprecision

Sales value

Con

su

mp

tion

valu

eh

igh

low

Consumption frequencyhigh low

Predictabilitysteady random

Runners

Repeaters

low

hig

hTar g

et

of

sto

ck t

urn

over

High informationdensity

High planningaccuracy

Consumption driven planning, Order-point- or Order frequencymethod – automated replenishment

Reorder-pointplanning

Medium information density

Medium planning accuracy

High information density

Medium planning accuracy

Medium information density

High planning accuracy

Procurement in case of demand

Understanding Demand behaviour

Strangers


Portfolio analysis – e.g. Top 10


Difference Analysis






�Customer/Supplier collaboration


Orders Orders

VMI

ForecastsConstraint-based S&OP

Demand Visibility

Channel Sensing

Demand Shaping

Market Opportunity

Opportunity-based S&OP

Active Demand Translation

MRP

I II III IV

Reacting Anticipating Collaborating Orchestrating

Evolutionary stages of Demand Focus

Courtesy of












Benefits to change

Predict to Prevail: Forecasting and Planning Service Demand in Challenging Times

In an unstable economy, within a sector characterized by erratic demand, and under a constant mandate to control costs, service organizations must be able to forecast future work and plan when resources (people and parts) will be needed. Aberdeen surveyed 200 service organizations in December 2008 to determine how Forecasting and Planning (F&P)strategies, processes, and technologies affect operational excellence and customer satisfaction. Leading firms, those that prudently forecast and plan for upcoming demand as well as unify their corporate-wide F&P activities, report lower service costs, improved workforce utilization, and better inventory performance than their competitors.

Jack McAvoy Aberdeen Group Benchmarking Report December 2008

Documents

Best Practice Demand Planning Discussion - Aricia€¦ · Best practice Demand Planning -Discussion Pressure to improve Demand Planning Implications of current economic climate Improving