Presentation on theme: "Dr. Ron Tibben-Lembke SCM 461"— Presentation transcript:
1 Dr. Ron Tibben-Lembke SCM 461 Demand ManagementDr. Ron Tibben-LembkeSCM 461
2 Role of Demand Management Collect information from all demand sourcesCustomersSpare partsNegotiate and Confirm shipping dates, quantitiesConfirm order status, communicate changes
3 Different Environments Factory to customers – plant very aware of customer needsFactory to DC – stable replenishment planPlan vs. Forecast:Forecast is what you think demand will be likePlan is how you will respond to demand“A manager cannot be held responsible for not getting a forecast right.”How are you going to respond to changes in demand?You have control over the plan and execution, not demandRain forecasted? You decide to bring umbrella or not.Planning a BBQ: 300 people? 500?
4 Independent vs. Dependent Demand Feeding manufacturing, demand for parts is dependent on manufacturing planSales to customers are independent of our (production) activities.Customer order decoupling point: when control of timing passes from customer to usMake to stock – Finished goodsAssemble to Order – WIPMake to Order – Raw MaterialsEngineer to Order - suppliers
5 Make to Stock Customers buy finished, generic product McDonalds’ heat lamp daysTriggers signal to make moreUse warehouses, DCs to fulfill demandMaybe VMI?Tradeoff of more flexible manufacturing, faster response, for less inventory
6 Assemble to OrderDefine customer’s order in terms of alternative components and optionsSubway, In-N-OutConfiguration management: combine options properly into a buildable final productFlexibility in combining components, options, and modulesMovement from MTS to ATO – less inventory, fresher product, better salesCombinations:31 ice cream * 4 sauces * 12 sprinkles = 1,488
7 Make/Engineer to Order No stock components to assembleCooking at home – could make any of the standard things you usually make: burger, pizza, chili, etc., etc.Include Engineer to OrderTell me what you’d like – fancy restaurantSignificant design element in order creationDon’t know possibilities of what customers might buy
8 What do you think? Which method is best? What kinds of uncertainty are involved in each?What determines customer service in each?What is the decoupling point in each system?
9 Communication with Depts. SOP – give forecasts, get prod. PlansCapacity: material (MTS), labor (MTO)Timing of deliveries & productionMaster Production SchedulingDetailed order info to MPSStatus of each orderFigs 2.5, 2.6
11 Aggregating DemandLong-term, or product-line forecasts more accurate than short term or detailed forecastsMonthly: Avg = 20, std dev =295%: which is +/- 20%Annual: Avg = 20 * 12 = 240Std. Dev = 2 * sqrt(12) = 6.995%: , which is +/- 5.8%Easier to forecast demand for components than for sales of particular car configurations.
12 Aggregating DemandIndividual item forecasts must add up to correct totalIndividual item percentage of total probably constantPyramid forecasting – bring things into alignmentForce people to accept higher targets without “owning” them
16 HP Inkjet PrintersPrinters made in Vancouver, sent via ship through Panama Canal to EuropeEurope warehouse stocks inventory by countryphysically different-- power supplymanuals different languagesSubstitution not allowedRe-supply time very long
17 Euro Plugs No standardized power supplies for Europe Different power supply for every country.
18 HP Inkjet PrintersRedesigned printers so that power supply added in EuropeRe-engineer product, power supplyAssembly done in a warehouse (Quality?)Manuals added in EuropeMany expensive changesStore ‘vanilla’ boxesPostpone point of differentiation
20 BenettonBenetton sweaters made of undyed wool, dyed once demand is knownDyeing LT much faster than productionHow many undyed sweaters to make?How many Red, Green, Blue, also, if this production process is cheaper, and you know you’ll sell some minimum amount?