Increasing Demand Insight and Forecast Accuracy with ... Demand Insight and Forecast Accuracy with Demand Sensing and ... Demand Signal Management ... SAP Demand Signal Management

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  • Increasing Demand Insight and ForecastAccuracy with Demand Sensing and Shaping

    Ganesh Wadawadigi, Ph.D.VP, Supply Chain Solutions,SAP

  • 2013 SAP AG. All rights reserved. 1

    The information in this presentation is confidential and proprietary to SAP and may not be disclosed withoutthe permission of SAP. This presentation is not subject to your license agreement or any other service orsubscription agreement with SAP. SAP has no obligation to pursue any course of business outlined in thisdocument or any related presentation, or to develop or release any functionality mentioned therein. Thisdocument, or any related presentation and SAP's strategy and possible future developments, products andor platforms directions and functionality are all subject to change and may be changed by SAP at any timefor any reason without notice. The information in this document is not a commitment, promise or legalobligation to deliver any material, code or functionality. This document is provided without a warranty of anykind, either express or implied, including but not limited to, the implied warranties of merchantability, fitnessfor a particular purpose, or non-infringement. This document is for informational purposes and may not beincorporated into a contract. SAP assumes no responsibility for errors or omissions in this document, exceptif such damages were caused by SAPs willful misconduct or gross negligence.

    All forward-looking statements are subject to various risks and uncertainties that could cause actual resultsto differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates, and they should not be relied upon in makingpurchasing decisions.

    Legal disclaimer

  • 2013 SAP AG. All rights reserved. 2

    Agenda

    Industry Trends and Business Drivers

    SAP Addressing the Needs

    Getting Started

    Wrap-Up

  • 2013 SAP AG. All rights reserved. 3

    Demand Network has Inherent Data Latency

    Multiple layers in the demandnetwork leads to data latency

    DemandSignalLatency

    DemandGranularity

    Multiple aggregations across thedemand network leads to loss ofgranularity

  • 2013 SAP AG. All rights reserved. 4

    DigitallyConnected

    SociallyNetworked

    BetterInformed

    79% of customers spend atleast 50% of total shopping timeresearching products online(Powerreviews)

    53% of customers abandonedan in-store purchase due tonegative online sentiment(Interactive Advertising BureauReport)

    59% of customers are willingto try a new brand to get bettercustomer service (AmericanExpress Global CustomerBarometer)

    Empowered Customers are Changing the Rules

  • 2013 SAP AG. All rights reserved. 5

    ProductLaunchFailures

    PromotionalEffectiveness

    20% lost sales due toproduct out of stock (GS1)

    27% loss of sale due toproduct wanted not availablein assortment (Q&A Research& Consultancy)

    75% product launches fail(AMR)

    -19% average ROI on tradepromotions (Capgemini)

    Business Drivers to Address Consumer Demand andBehavior

    Decline inMarketShare

    10% decline in marketshare on average due torecurring out of stock(Journal of BusinessLogistics)

    BrandSubstitution

    82% of consumers willsubstitute and switch brandsdue to an out of stock product(Marketing Science Journal)

    PriceSensitivity

    52% of consumers agreethat the price of a product ismore important than brandnames (dunnhumby)

    LostSales

  • 2013 SAP AG. All rights reserved. 6

    DigitallyConnected

    Need for Demand Sensing & Shaping Capabilities

    Deep Insights into CustomerNeeds

    Comprehensive Market ShareAnalysis

    Predict Demand and OptimallyPosition Supply

    1

    2

    3

  • 2013 SAP AG. All rights reserved. 7

    Agenda

    Industry Trends and Business Drivers

    SAP Addressing the Needs

    Getting Started

    Wrap-Up

  • 2013 SAP AG. All rights reserved. 8

    Aggregated Demand Planning Needs to be Augmented

    Collaborative DemandPlanning

    Optimize forecasts andgenerate a consensus

    demand plan

    Supply NetworkPlanning

    Optimally plan supply anddeploy inventory to meet

    demand plan

    APO-DP APO-SNP

    Demand Signal Management

    Enterprise Demand SensingCapture Demand Signals

    Collect, harmonize, enrichall external and internaldemand signals into asingle source of truth

    Analyze Demand

    Develop comprehensivemarket and demand insights

    Predict Demand

    Granular forecasting basedon demand pattern recognition

  • 2013 SAP AG. All rights reserved. 9

    Cross-functional Process View

    Marketing Planning and ResourceManagement

    DemandSensing and

    Shaping

    Sales andOperationsPlanning

    Sales Planningand Performance

    Management

    Finance

    Marketing

    Sales

    Supply Chain Management Reviewand AnalysisDemandReview

    CollaborativeDemandPlanning

    DemandSensing

    DemandSignal

    Capture

    Analyzeand

    ShapeDemand

    Marketing Planningand ProgramManagement

    Marketing Analyticsand Performance

    Management

    SalesPlanning andMonitoring

    Output to Supply Processes

    Supply ChainSalesMarketing

  • 2013 SAP AG. All rights reserved. 10

    Agenda

    Industry Trends and Business Drivers

    SAP Addressing the Needs

    SAP Demand Signal Management

    SAP Enterprise Demand Sensing

    Getting Started

    Wrap-Up

  • 2013 SAP AG. All rights reserved. 11

    SAP Demand Signal Management on HANA

    SAP Demand Signal Management is the enterprise application for integrating all relevantdemand signals (internal and external) to a single source of truth

    RetailerPOS

    SocialMedia

    Market Researchdata (e.g. Nielsen)

    Distributor/Wholesaler

    SAPBusiness Suite

    SAP Demand Signal Management

    Linking additional externalinformation (e.g., weather)

    DEMAND RESPONSE

    Leverage data in enterprisebusiness applications

    DEMAND & MARKETVISIBILITY

    Increased insights withenhanced analytics

  • 2013 SAP AG. All rights reserved. 12

    Scalable and Holistic Approach to Leveraging Value ofDemand Signals with DSiM

    External & InternalDemand Signal Upload

    DataHarmonization

    1

    2

    34

    5

    6

    Data Cleansing& Validation

    Demand DataEnrichment

    Integrate toDemandResponse

    DemandInsights

  • 2013 SAP AG. All rights reserved. 13

    Benefits of a Single Source of Demand Signals

    U.S. Canada U.K.

    NielsenMarket ResearchTracking Data /Retail Panel

    Wal-MartPOS Data

    WalgreensPOS Data

    Category 2

    Category 2

    1

    4

    5

    Category 2

    Category 1

    ERPInternal Data

    IRIMarket ResearchTracking Data /Retail Panel

    Category 2

    Category 1

    Category 2

    Category 1

    Category 2

    Category 1

    Category 2

    22

    Category 2

    Category 1Category 2

    Category 2

    Category 1

    BrandPerformance in

    U.S.Brand items spread

    across two categories

    Local Market Share

    1 Brand MarketShare in N.A.

    Market Research TrackingData from different

    providers

    Regional Market Share

    22

    SalesPerformance in

    CanadaSell-In vs. Sell-Out

    comparison

    Out-of-Stock Analysis

    5

    SalesPerformance of

    WalmartCross country view

    Customer language

    4

    CategoryManagement

    Category Managementfor Walgreens in U.K.

    3

    Category 2(Incl. competitors

    POS data)

    Category 2

    3

  • 2013 SAP AG. All rights reserved. 14

    Select DSiM Use Cases

    PromotionEffectiveness

    Track promotion participation per store

    Identify Top/Bottom 10 selling stores

    Measure variations in Promoted Price Market ShareAnalysis

    Monitor market trends, market sizeand competitor dynamics

    Identify root causes for market sharedeclines (e.g., new competitorproduct)

    ForecastAccuracy

    Increase forecast accuracy byincluding POS data in the DemandPlanning process

    Analyze historic sales and promotionsfor planning insights

    SalesAnalysis

    Analyze demand data from differentsources to spot trends

    Analyze historical sales, and productlisting to adapt sales strategy

    Switch between internal and external(e.g., Retailer) views

    Out of StockReduction

    Quickly identify stores with out ofstock and take mitigating action

    Monitor Inventory levels across yournetwork and reduce carrying costs Product Launch

    Success

    Track store sales, distribution, priceand promotions for new products

    Ensure stock availability at stores anddistribution centers

  • 2013 SAP AG. All rights reserved. 15

    Embedded Analytics Delivered with DSiM

    Function Roles Analysis

    Sales Key Account Manager / Sales DirectorSales AnalysisPromotion AnalysisOn shelf Availability

    Marketing Marketing Director / Product Manager Market Share AnalysisProduct Launch

    Supply ChainManagement

    Head of Logistics / Supply Planner /Demand planner

    Out of stock AnalysisInventory Analysis

    Pre-defined analytics(with the option to define and adopt new additional analytics)

    Data analysts can leverage DSiM data with predictive and data miningalgorithms from SAP Predictive Analytics

    IntegrateSocialMediaData

  • 2013 SAP AG. All rights reserved. 16

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    SAP Demand Signal Management Demo