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1 © The Delos Partnership 2003 Customer Relationship Management Setting up the forecast process - ideas for improvement.

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Presentation on theme: "1 © The Delos Partnership 2003 Customer Relationship Management Setting up the forecast process - ideas for improvement."— Presentation transcript:

1 1 © The Delos Partnership 2003 Customer Relationship Management Setting up the forecast process - ideas for improvement

2 2 © The Delos Partnership 2003 Forecasting Needs a Simple Process FilterDemand Computeforecast CaptureActual C O N S E N S U S F O R E C A S T C O N S E N S U S F O R E C A S T Hold Demand Review Agree commercial plans plans Agree Exceptional demand Assumptions written down and agreed ReviewAccuracy

3 3 © The Delos Partnership 2003 Demand Control CheckForecast Check Abnormal Demand ReceiveOrder 100 % delivery to promise Give Customer a promise Check ATP Agree Lead time for Abnormal demand ConsumeForecast It was Not In the forecast

4 4 © The Delos Partnership 2003 Elements to decide Horizon Unit of Measure Time Buckets Time Fences Level of Detail –Item –Family –Capacity

5 5 © The Delos Partnership 2003 Horizon A forecast provides visibility for –Materials procurement –Internal capacity requirements –Short and long term financial projections –Suppliers capacity requirements Horizon of forecast needs to give adequate visibility

6 6 © The Delos Partnership 2003 Horizon Covers All Needs 24 months gives budget and forecast year Budget process 6 months gives likely outturn 30 months rolling forecast Materials Capacity Cash

7 7 © The Delos Partnership 2003 Forecasting – Unit of Measure Forecasting should be in unit of measure as sold to customer May need to be in aggregate where family volumes needed Issue – how to aggregate

8 8 © The Delos Partnership 2003 Forecasting - Time Bucket Need to determine whether basic time interval is –Month –Week –Day If monthly does it get divided into weeks If weekly does it get divided into days? If weekly or daily is each week or day going to be different

9 9 © The Delos Partnership 2003 Periods123456789101112 Forecast 10203040102030408162432 Actual Demand Proj Avail Balance 9070400654515504226225 Available to Promise Cumulative ATP Master Schedule 75 Item Level Forecast Part Number: 12345 Lead Time: 2 periods Safety Stock: 0 Min Ord Qty: 75 On Hand: 100

10 10 © The Delos Partnership 2003 Demand Time Fence Horizon PLAN MANAGE EXECUTE Cumulative Lead Time Add or subtract To capacity Strong Link to Integrated Enterprise Planning Process Capacity and Materials firm Release Orders Orders only

11 11 © The Delos Partnership 2003 Factors That Determine the Detail Requirements for planning material and capacity Customer service policy Position in the supply chain Tradeoff between precision and accuracy –Better to be roughly right than precisely wrong

12 12 © The Delos Partnership 2003 Customer Relationship Strategy Design Purchase Intermediate Manufacture Sub-assemble Finish Distribute Where Do you meet The Customer ? StockTo Order End item Forecast Capacity Forecast Family Forecast

13 13 © The Delos Partnership 2003 Periods123456789101112 Forecast25 20 Actual Demand Proj Avail Balance 7550250502505030106545 Available to Promise Cumulative ATP Master Schedule 75 End Item Level Forecast Part Number: 12345 Lead Time: 2 periods Safety Stock: 0 Min Ord Qty: 75 On Hand: 100

14 14 © The Delos Partnership 2003 Forecast Consumption Periods123456789101112 Forecast 151525 20 Actual Demand 10 Proj Avail Balance 7550250502505030106545 Available to Promise 9075 Cumulative ATP Master Schedule 75 Part Number: 12345 Lead Time: 2 periods Safety Stock: 0 Min Ord Qty: 75 On Hand: 100

15 15 © The Delos Partnership 2003 Customer Profile Customer X 50per month Customer Y 10 per month Customer Z 5 per month Customers A… 35 per month Total =100 per month Forecast at End Item Level

16 16 © The Delos Partnership 2003 Forecast Consumption Periods123456789101112 Forecast Actual Demand Proj Avail Balance 7550250502505030106545 Available to Promise 9075 Cumulative ATP Master Schedule 75 Part Number: 12345 Lead Time: 2 periods Safety Stock: 0 Min Ord Qty: 75 On Hand: 100

17 17 © The Delos Partnership 2003 Forecasting Different Demand Streams Allows control of demand by market segment or customer group or customer Prevents over-consumption by one market or sector Necessary when same product goes to different market sectors (e.G. Uk/export)

18 18 © The Delos Partnership 2003 In many companies multiple demand streams for the same item need to be managed (consumed) separately and ATP (available to promise) calculated separately Managing Multiple Demand Streams

19 19 © The Delos Partnership 2003 Managing Multiple Demand Streams Examples of Multiple Demand Streams –Export and UK –Different Market Sectors Retail/Industrial Spares/OEM –Different Customer Groupings Major Accounts Minor Accounts –Different Customers Large Customer A Large Customer B All other Customers –Different Customer Categories Gold Card Silver Card

20 20 © The Delos Partnership 2003 Global Supply Chain Planning Extension of make to stock environment Used when geography separates make from sell Allows for visibility in chain to maximise inventory control

21 21 © The Delos Partnership 2003 Global Supply Chain Planning Bill of Distribution Same Product Code : Location code needed

22 22 © The Delos Partnership 2003 Distribution Planning Process Receive Forecast Calculate Plan CaptureData BALANCED PLAN Hold Supply Review Transmit the plan Receive Supply Plan Review action messages messages ReviewMessages

23 23 © The Delos Partnership 2003 Periods123456789101112 Forecast25 20 Warehouse Demand Actual Demand Proj Avail Balance Available to Promise Master Schedule 150 Master Schedule UK Part Number: 12345 Lead Time: 2 periods Safety Stock: 50 Min Ord Qty: 150 On Hand: 300 Location : 001 UK

24 24 © The Delos Partnership 2003 Periods123456789101112 Forecast025 20 Warehouse Demand 100 150 5015010050 Actual Demand 25 Proj Avail Balance 27515075501751501751008060190170 Available to Promise 125015000 Master Schedule 150 Master Schedule - UK Part Number: 12345 Lead Time: 2 periods Safety Stock: 50 Min Ord Qty: 150 On Hand: 300 Location : 001 UK

25 25 © The Delos Partnership 2003 Periods123456789101112 Forecast520 Actual Demand 15 Proj Avail Balance 60402010080604020100806040 Available to Promise 65100 Master Schedule 100 Planned Release 100 DRP - Germany Part Number: 12345 Lead Time: 2 periods Safety Stock: 20 Min Ord Qty: 100 On Hand: 80 Location : 002 Germany

26 26 © The Delos Partnership 2003 Periods123456789101112 Forecast2040 Actual Demand 20 Proj Avail Balance 50160120801901501107018014011070 Available to Promise 70150 Master Schedule 150 * 150 Planned Release 150 DRP Spain Part Number: 12345 Lead Time: 3 periods Safety Stock: 50 Min Ord Qty: 150 On Hand: 90 Location : 003 Spain * In Transit

27 27 © The Delos Partnership 2003 Periods123456789101112 Forecast0010 Actual Demand 20 Proj Avail Balance 50 40302060504030206050 Available to Promise 50 Master Schedule 50 Planned Release 50 DRP Italy Part Number: 12345 Lead Time: 3 periods Safety Stock: 20 Min Ord Qty: 50 On Hand: 70 Location : 004 Italy

28 28 © The Delos Partnership 2003 Periods123456789101112 Forecast520 Actual Demand 15 Proj Avail Balance 60402010080604020100806040 Available to Promise 65100 Master Schedule 100 Planned Release 100 CPR – Customer ABC Part Number: 12345 Lead Time: 2 periods Safety Stock: 20 Min Ord Qty: 100 On Hand: 80 Location : 002 Customer ABC

29 29 © The Delos Partnership 2003 Hierarchy of Forecast The higher the level The more accurate Marketing Sub Family Marketing Family £ Plan Production Family Item Number Production Sub Family Item Number Customer/Distribution Centre

30 30 © The Delos Partnership 2003 Product Variants Blue Pen Part Number 12346 Blue Pen Part Number 12346 Red Pen Part Number 12345 Red Pen Part Number 12345 Black Pen Part Number 12347 Black Pen Part Number 12347 Green Pen Part Number 12348 Green Pen Part Number 12348 VariantForecastActual Blue4050 Red6070 Black3020 Green7060 Total200 How many Nibs And How many Caps and barrels Needed ?

31 31 © The Delos Partnership 2003 Planning Family Blue Option Part Number 12346 Blue Option Part Number 12346 Red Option Part Number 12345 Red Option Part Number 12345 Black Option Part Number 12347 Black Option Part Number 12347 Green Option Part Number 12348 Green Option Part Number 12348 Common Parts 46783 Common Parts 46783 Pen Family 43785 Pen Family 43785 20 % = 0.2 30 % = 0.3 15 % = 0.15 35 % = 0.35 Forecast = 200/mth 100 % = 1.0

32 32 © The Delos Partnership 2003 Modular Bill Works Best If end item forecasting difficult or impossible because of number of items Manufacturing lead time exceeds competitive lead time

33 33 © The Delos Partnership 2003 Customer Relationship Strategy Design Purchase Intermediate Manufacture Sub-assemble Finish Distribute Where Do you meet The Customer ? StockTo Order Capacity Forecast

34 34 © The Delos Partnership 2003 Forecast of Capacity Work Centre Number : 41 Cum Lead Time : 6 periods Load Factor : 70% Order 1456 : Item 1435 100 units 1.1 hours per unit = 110 hours Order 1567 : Item 1325 200 units 1.2 hours per unit = 240 hours Periods12345678910111213 Forecast0000004256 Actual Demand 56 14 Proj Avail Balance 0000000000000 Available to Promise 4256 Cumulative ATP 4298154210266322378 Master Schedule 56

35 35 © The Delos Partnership 2003 Establishing the Demand Management Process Thought needed to be given to –Horizon –Level – planning bills, capacity or end item forecasting –Time buckets Implementation of forecasting and DRP may require education of customer and agreement on key policies Benefits are: –Reduced inventory –Improved customer service –Reduced effort in forecasting

36 36 © The Delos Partnership 2003 Cultural Issues to face Why should I bother to take it seriously ? This is an operational issue; its nothing to do with Sales or Marketing Forecasting takes away time from selling I will spend a little time now, but much later Forecasts are best done by a system

37 37 © The Delos Partnership 2003 Project Organisation STEERING COMMITTEE PROJECT TEAM INNOVATIONINNOVATION DEMANDDEMAND SUPPLYSUPPLY PROJECT MANAGEMENT SALES FORECASTING CUSTOMER RELATIONSHIP MANAGEMENT MASTER PRODUCTION SCHEDULING PROCUREMENT LEAN AND AGILE PERFORMANCE MEASURES FINANCE SUPPORTSUPPORT INTEGRATED ENTERPRISE PLANNING Sponsor Project Leader DATA ACCURACY LEAN AND AGILE SUPPLIER RELATIONSHIP MANAGEMENT

38 38 © The Delos Partnership 2003 Task Team Role VISIONVISION VISIONVISION STRATEGYSTRATEGY STRATEGYSTRATEGY TASK TEAMS WORKING SOFTWARE DETAILED POLICIES AND PROCEDURES DETAILED ROLES CULTURECULTURE DETAILEDKPISDETAILEDKPIS FORECASTING CUSTOMER SERVICE

39 39 © The Delos Partnership 2003 Task Teams Translate their element of the strategy and vision into reality Cross-functional Develop the policies and procedures that are needed Get familiar with the software, and make sure that this integrates with policy and procedures Develop the training material

40 40 © The Delos Partnership 2003 Forecasting benefits What I forecast I know I can sell Forecasting is the only way of telling the supply side what to make or buy Forecasting better means more cash and more profit Forecasting better means less waste Having a forecast can mean telling the customer what they need !

41 41 © The Delos Partnership 2003 Forecasting more accurately Means Less Inventory Better Customer Service Reduced Cost Which means More Cash More Profit A competitive edge


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