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Demand Planning 7.0 Mark K Williams, CFPIM, CSCPMarch 18, 2013 QAD Global Supply Chain Planning Practice QAD West Coast User Group.

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Presentation on theme: "Demand Planning 7.0 Mark K Williams, CFPIM, CSCPMarch 18, 2013 QAD Global Supply Chain Planning Practice QAD West Coast User Group."— Presentation transcript:

1 Demand Planning 7.0 Mark K Williams, CFPIM, CSCPMarch 18, 2013 QAD Global Supply Chain Planning Practice QAD West Coast User Group

2 2 Introduction to DynaSys Introduction to forecasting Demand Planning 7.0 attributes Easy On Boarding Agenda Introduction

3 3 Introduction to DynaSys

4 “Offer to our customers, a Comprehensive and Effective Planning Solution dedicated to Supply Chain Excellence, benefiting from our 27 years of expertise.” The Mission of DynaSys Introduction to DynaSys

5 5 A Few DynaSys Customers

6 Global Customers With Multiple Sites Introduction to DynaSys Baxter Healthcare : 25 sites Essilor : 18 sites Ipsen : 110 sites Mapa/Spontex : 27 sites Everris : 32 sites

7 Tactical Strategic Demand Planning Distribution Planning Production Planning Procurement Planning SUPPLIERSUPPLIER CUSTOMERCUSTOMER Internet Collaboration Integration KPI’s Operational ProcurementProductionDistributionSales Supply Chain Planning Suite Introduction to DynaSys Master Planning Network & Inventory Optimisation Not Yet!

8 8 Introduction to Forecasting

9 An Industry Supply Chain Introduction Physical Supply Chain Information Supply Chain Natural Resources SuppliersProductionDistributionRetailConsumers

10 An estimate of future demand. A forecast can be constructed using quantitative methods, qualitative methods, or a combination of methods, and it can be based on extrinsic (external) or intrinsic (internal) factors. Various forecasting techniques attempt to predict one or more of the four components of demand: cyclical, random, seasonal, and trend. APICS Dictionary What is a Forecast? Introduction

11 4 Components of Demand Trend New! Cyclical Random New Product Follows Economy Seasonal Daily (fast food) Annually (snow plows) Mature Product Outlier

12 Forecasts Are More Accurate When Aggregated Introduction How Many Brown, Size 10 Shoes Will We Sell Thursday? Not Very Accurate – Just a Wild Guess How Many Shoes Will We Sell This Month? Better Chance Of Being Accurate – Can Use Data

13 Forecasts Become Less Accurate With Time Introduction

14 To Improve Forecast Accuracy, Involve Your Customers & Major Stakeholders Introduction

15 15 It All Sounds Good, But….

16 16 Sr. Managers Meet To Discuss Forecasting Introduction

17 17 “We have 42,000 SKU’s and a limited budget for personnel to do forecasting. How do we get the most bang for the buck??” “Sales, Marketing & Demand Planning all think they are better at forecasting promotions. Who is right?” “My old company kept 2 weeks of Safety Stock on hand for each item. Isn’t that enough?” “Which products are behind budget?” “The forecast is always wrong, why bother?” Senior Management Discussion Overheard… Introduction

18 18 “The Forecast Is Always Wrong, Why Bother?” Senior Management Overheard….

19 Forecasting Rule #1 Why Forecast? The Forecast Is WRONG

20 20 The Quandary Why Forecast? Overseas Supplier Supplier Lead Time Item Scanned Delivery Expected Customer Lead Time East Coast DC

21 Often have employees that work overtime for months, followed by layoffs Are poor users of manufacturing capacity Are unable to fulfill “surprise” customer orders Face huge expediting charges Have excessive inventory write-offs Have the dreaded combination of a poor customer service level and too much inventory! Disappoint customers by not responding to promotions on time Companies That Do Not Adequately Forecast: Why Forecast?

22 Out of Stock Rates Double on Promoted Items Introduction Source: Stax, Inc. Store Audits Average On-Shelf Availability Levels

23 23 “We have 42,000 SKU’s and a limited budget for personnel in forecasting. How do we get the most bang for the buck??” Senior Management Overheard….

24 24 Isolating importation errors Identification of items behaving badly Identification and correction of historical anomalies Superior Forecast Engine ABC Analysis to separate the critical from the trivial Multi-level forecasting DP 7.0 Answers…. Overcoming Limited Resources

25 Statistical Forecasting Interface QAD Demand Planning 7.0 ShortcutsShortcuts Collaborative Messages Excel Like Grid Graphs ControlsControls

26 26 Isolating Importation Errors Overcoming Limited Resources

27 27 When importing data, problems can occur DP 7.0 makes it easy to identify problems that the user can fix DP 7.0 automatically highlights items with high forecast error – major time saver Importation & Correction Introduction

28 28 Identifying Import Problems Isolating Importation Errors 1 3 2

29 29 Identification Of Items Behaving Badly Overcoming Limited Resources

30 30 Last Month’s Alerts Highlight Forecast Problems Identification of Items Behaving Badly Last Month’s Forecast Was Very Wrong – User Should Review

31 31 Modifying Alert Parameters Identification of Items Behaving Badly Deviation Gap set at 10% will generate no alert Change Deviation Gap to 5% generates an alert

32 32 Identification And Correction Of Historical Anomalies Overcoming Limited Resources

33 33 Forecasts are built on pattern recognition What if your sales history included: -Extraordinary demand caused by a competitor’s stockouts? -A weather driven surge or absence of demand? -A drop in orders caused by your prolonged stockout? -Would you want the future to reflect that past? DP 7.0 provides statistical boundaries that help identify these anomalies, allowing you to accept or modify them Why Modify History? Identification & Correction of Historical Anomalies

34 34 Outliers In Sales History Identification & Correction of Historical Anomalies

35 35 Options for Outliers Identification & Correction of Historical Anomalies A. Item looks suspicious B. Modify history C. Accept history Actual History Modified History Suspicious Quantity Validation Modification

36 36 Superior Forecast Engine Overcoming Limited Resources

37 Method used to select the “best fit” time series forecasting techniques for your data Judged to be one of the most accurate in the world There are over 30 other forecasting methods available including: -Curve Fitting -Exponential Smoothing -Regression -New Product -Lifecycle One size DOES NOT fit all! Forecast Pro Superior Forecast Engine

38 38 ABC Analysis To Separate The Critical From The Trivial Overcoming Limited Resources

39 First noted by Vilfredo Pareto Items are classified as: -A items (fastest movers) 20% = 80% of sales or usage -B items (middle-range movers) 30% = 15% of sales or usage -C items (slow movers) 50% = 5% of sales Focus on fast moving items Useful in many applications -In forecasting, where we want to keep our attention ABC Inventory Management ABC Analysis To Separate The Critical From The Trivial

40 40 Tighter Alert Parameters For “A” Items ABC Analysis To Separate The Critical From The Trivial Deviation Gap set at 10% will generate no alert Change Deviation Gap to 5% generates an alert

41 ABC Classification ABC Analysis To Separate The Critical From The Trivial A=80%

42 ABC Classification ABC Analysis To Separate The Critical From The Trivial A=60%

43 43 Multi-Level Forecasting Overcoming Limited Resources

44 44 Number of SKU’s Aggregation improves accuracy Forecasting resources Collaboration Why Not Forecast At The Item Level? Multi-Level Forecasting

45 45 Bottom Up – Top-Down Forecasting Multi-Level Forecasting Product Group

46 46 “Sales, Marketing & Demand Planning all think they are better at forecasting promotions. Who is right?” Senior Management Overheard….

47 Demand Plan Statistical Forecast Sales Input Marketing Input Customer Input New Product Development Collaboration in the Demand Planning Process Forecasting Promotions

48 48 Enable Collaboration Retain each collaborators input Measure each collaborators accuracy DP 7.0 Answers Forecasting Promotions

49 49 Original, Non-Promotional Forecast Forecasting Promotions Original Forecast 27,271

50 50 1st Collaborator – Marketing Forecasting Promotions Marketing Forecast 35,000

51 51 2nd Collaborator - Sales Forecasting Promotions Sales Forecast 60,000

52 52 3 rd Collaborator – Demand Planning Forecasting Promotions DP Forecast 45,000

53 53 Each collaborator inputs their forecast A predefined hierarchy determines which forecast has precedence in determining the final forecast All forecasts are stored in the system After the promotion the system can determine which of the forecasts was the most accurate When Forecasting Promotions Forecasting Promotions

54 54 “My Old Company Kept 2 Weeks Of Safety Stock On Hand For Each Item. Isn’t That Enough?” Senior Management Overheard….

55 How Do You Determine Safety Stock Levels? Based on producing 1 months average sales and the “2 Week Safety Stock” philosophy, is the amount of inventory appropriate? Could it be improved? 55 Calculating Safety Stock Production Qty = 1 Month Average Safety Stock = 2 Weeks

56 How Do You Determine Safety Stock Levels? Like the previous example, the forecast & actual totaled 600 for six months Based on producing 1 months average sales and the “2 Week Safety Stock” philosophy, is the amount of inventory appropriate? Could it be improved? 56 Calculating Production Qty = 1 Month Average Safety Stock = 2 Weeks

57 How Do You Determine Safety Stock Levels? The best way to calculate safety stock is based on: -Forecast accuracy -Desired service level -Lead time 57 Calculating Safety Stock

58 Impact of Desired Service Level 58 Calculating Safety Stock

59 Impact of Differing Lead Times 59 Calculating Safety Stock

60 Replace Safety Stock In EA 60 Calculating Safety Stock Current Safety Stock imported from EA EA Safety Stock compared to Calculated Safety Stock After reviewing the computed Safety Stock levels, you can have them exported back to EA, or you can ignore them Calculated Safety Stock Current Safety Stock In EA

61 61 Easy On Boarding DP 7.0

62 62 Why EOB? Easy On Boarding DP 7.0 Configurability Strength Can adapt to almost every business process Can be fine tuned to suit user requirements DP 7.0 Configurability Weakness Complex Longer setup time Higher learning curve for customer

63 63 DP 7.0 is a highly configurable tool -EOB is designed to meet 90% of customer requirements “out of the box” -Reduces implementation time -Speeds the process of the customer getting value from the software EOB is a preconfigured database that includes: -Hierarchies mapped to QAD EA -Standard import / export with QAD EA -Standardized process & parameters -Standardized screens -Standardized KPI’s What is EOB? Easy On Boarding

64 Integration 64 Easy On Boarding

65 65 Join us in San Antonio, TX May 6-9, 2013 Early Bird Ends Soon! Building the Effective Enterprise

66 Mark K. Williams, CFPIM, CSCP QAD Global Supply Chain Practice © 2013 QAD Inc Demand Planning Contact


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