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Demand Planning Sam Dimasi, Professional Services Consultant, QAD LEARN. NETWORK. DISCOVER. | #QADexplore LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Safe Harbor Statement The following is intended to outline QAD’s general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, functional capabilities, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functional capabilities described for QAD’s products remains at the sole discretion of QAD. LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Agenda LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Agenda Introduction to Demand Planning QAD Demand Planning Project Approach Summary Questions & Answers Next Steps LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Introduction to Demand Planning LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Definitions Forecasting “The business function that attempts to predict sales and use of products so they can be purchased or manufactured in appropriate quantities in advance” APICS Dictionary LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Definitions Demand Planning “Using forecasts and experience to estimate demand for various items at various points in a supply chain. Several forecasting techniques may be used during the planning process. Often, families of items are aggregated in doing this planning. Aggregation also may occur by geographical region or by life cycle stage. Forecast demand is compared to actual demand in order to measure and increase forecast accuracy.” APICS Dictionary LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Why Forecast? To anticipate demand Maximize visibility to − Procure finished goods/ raw materials − Understand resource constraints/ requirements − Project and understand inventory levels − Project manufacturing operational costs − Assist with the budgeting process to manage revenue/cost plans and cash flow LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Elements of a Good Process Predefined timeline − Clearly understood, accepted and supported Co-ordination of activity − A role that keeps things on track − Part of the TEAM, not the “Lone Ranger” Input from those “in the know” − Promotions, new customers, product deletions Measure accuracy − Key for improvement − At the appropriate level LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning More on Measurement Metric: Forecast accuracy Key metric: Stock level Key metric: Customer service level Stock out risk Probaibility 40% 35% 30% 25% 20% 15% 10% 5% 0% 0% 20% 40% 60% 80% 100% Relative standard deviation 120% 140% LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Benefits of a Good Process No forecast is perfect but.... Issues can be identified in advance Resource deployment is better controlled Inventory is where it needs to be at the right time and in the right quantity Improved ability to meet customer demand Improved reputation leading to increased business LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Results up to 50% Forecast Accuracy Improvement up to 10% up to 50% Customer Service Improvement Inventory Level Reduction 60% 12% 60% 50% 10% 50% 40% 8% 40% 6% 30% 4% 20% 2% 10% 30% 20% 10% 0% Guy Laberyie Degrenne Mayoli Spindler 0% 0% Cémoi Janssen Martell Labeyrie Cadbury Dorel Laberyie Martell LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning QAD Demand Planning LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning DynaSys Demand & Supply Chain Planning Our focus today... Strategic Collaboration Web Access Network & Inventory Optimization Operational Procurement Planning Production Planning Distribution Planning Integration Buy Manufacture Demand Planning Customer Supplier Tactical Sales & Operations Planning KPI’s Deliver Sell LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Demand Planning Customers Food & Beverage/ CPG Life Sciences Industries Luxury Goods LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning QAD Early Adopters BCM PCCA Invacare Watts Water Technologies HP Indigo AMVAC LEM ANCA BAKELS LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Features Process-oriented solution Highly configurable − Flexible integration capability Pre-defined parameters and metrics Industry leading statistical engine Spreadsheet “look and feel” data grids − Configurable for data and alerts / indicators − Graphical representation − Import data directly into grids LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Process Clean history Metrics Collaborate Life Cycle Aggregate Calculate Disaggregate LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Why Clean History? Forecasts are built on pattern recognition What if your sales history included − Extraordinary demand caused by a competitor’s stock outs? − A weather driven surge or absence of demand? − A drop in orders caused by your prolonged stock out? Need to deal with outliers where we don’t want future to reflect past LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Dealing With Outliers LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Multi-Level Forecasting Aggregate Item Update marketing Events Bottom Up Finished Product Finished Product x Customer Top Down Import History Bottom Up Aggregate Source of Demand Historical Analysis Better Forecast Top Down Product Group Disaggregate Rebalance through all levels LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Statistical Engine Calculates initial forecast for review − Deal with exceptions There are over 30 forecasting methods available including: − Curve Fitting − Exponential − Smoothing − New Product − Lifecycle − ‘Automatic’ Best fit ‘automatic’ calculation method recommended initially Different methods for each forecast record LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Life Cycle Management New product introduction Product substitution End of life LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Collaboration Statistical forecast normally forms baseline Users contribute business knowledge outside realm of statistical forecast Collaborative users – sales people, regional marketing managers and demand planners Demand Planning allows incorporating additional business knowledge into forecast LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Consensus LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Metrics Forecast accuracy − Archive forecast at the end of each cycle − A number of reliability measures − Review poor performance − Target improvements and overcome issues Performance to budget − Load budgets to compare to actual − Track gaps to assist with remedial action ABC analysis − Provides focus LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Reliability Analysis LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Performance to Budget LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning ABC Analysis LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Project Approach LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning 2 Different Project Approaches Dedicated project − Based on a detailed functional & technical analysis − Aims to meet specific customer requirements Easy On Boarding − Based on pre-configured solution with broad relevance across industries − Aims to minimize implementation effort and cost − Represents initial implementation that can be later enhanced LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning EOB Data Model Weekly Monthly Statistical Level 3 x Product Line Monthly Statistical Life cycle Level 2 x Item x Site Monthly Item x Site Validation Export Item x Site x Level 1 x Monthly Customer Customer x Item Promotions History cleaning Collaboration Item x Site x Ship-To QAD Enterprise Applications Forecast LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning EOB Implementation Project effort: between 30 to 45 days according to adjustment LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Summary LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Summary Demand Planning is key for visibility Robust, co-ordinated process with supported timeline Leverage experience − Collaboration is important leading to improved forecasts Measure the outcome − Forecast accuracy improvements − Inventory reductions − Customer Service Level improvements QAD Demand Planning is the enabler LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Questions & Answers LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Questions & Answers Sam Dimasi: [email protected] LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Next Steps LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning Next Steps Attend − ‘Supply Chain Planning’ following this session Ariel Weil Rhythms Ballroom (2nd Floor) Stop by the Solutions Expo − See QAD Demand Planning in action LEARN. NETWORK. DISCOVER. | #QADexplore Demand Planning www.qad.com ©QAD Inc. 2014 LEARN. NETWORK. DISCOVER. | #QADexplore