1. AG Barr Proc 1 © The Delos Partnership 2003 Sales Forecasting and Demand Management The process

2. AG Barr Proc 2 © The Delos Partnership 2003 Forecasting Needs a Simple Process Analyze History Execute Forecast Capture History C O N S E N S U S F O R E C A S T Review Commercial Plans Review Exceptional Demand Hold Demand Review Assumptions written down and agreed

3. AG Barr Proc 3 © The Delos Partnership 2003 1. Capture Actual Each month we capture Actual History Captured from Order Entry Software - shipments

4. AG Barr Proc 4 © The Delos Partnership 2003 Forecasting Needs a Simple Process Filter Demand Execute Forecast Capture Actual C O N S E N S U S F O R E C A S T Review Commercial Plans Review Exceptional Demand Hold Demand Review Assumptions written down and agreed

5. AG Barr Proc 5 © The Delos Partnership 2003 2. Review Actual Shipments Look for unusual shipment, not going to be repeated Competitor going out of business Unusual promotions Millennium bug Mistake Beware spike caused by stock outs Aug5035 Sept6040 Oct 237Stockout Nov5750

6. AG Barr Proc 6 © The Delos Partnership 2003 Forecasting Needs a Simple Process Filter Demand Execute Forecast Capture Actual C O N S E N S U S F O R E C A S T Review Commercial Plans Review Exceptional Demand Hold Demand Review Assumptions written down and agreed

7. AG Barr Proc 7 © The Delos Partnership 2003 3. Execute Statistical Forecast Forecast should use history to produce trends and identify patterns Key influences to be detected : –Base –Trend –Seasonality

8. AG Barr Proc 8 © The Delos Partnership 2003 Forecasting Needs a Simple Process Filter Demand Execute Forecast Capture Actual C O N S E N S U S F O R E C A S T Review Commercial Plans Review Exceptional Demand Hold Demand Review Assumptions written down and agreed

9. AG Barr Proc 9 © The Delos Partnership 2003 Sales Forecasting: Inputs New Customers New Products Pricing Initiatives Advertising And Promotions Cannibalisation Customers Own Forecast Competitors Activity External Factors

10. AG Barr Proc 10 © The Delos Partnership 2003 Sales Forecasting: Inputs New Customers New Products Pricing Initiatives Advertising And Promotions Cannibalisation Customers Own Forecast Competitors Activity External Factors Marketing Plans

11. AG Barr Proc 11 © The Delos Partnership 2003 Forecast must be supported by Assumptions JulAugSepOctNovDecJanFebMarAprMayJun 1254145 156 170 135 145160 1345145167135180200 150 200 1256100200 300 200 134750 40 30 20 4050 NUMBERS ! ASSUMPTIONS

12. AG Barr Proc 12 © The Delos Partnership 2003 Workshop What are the major assumptions on which the forecast is based and who Creates and owns the assumptions ? Creates and owns the assumptions ? Should have visibility of the assumptions ? Should have visibility of the assumptions ? What are the major assumptions on which the forecast is based and who Creates and owns the assumptions ? Creates and owns the assumptions ? Should have visibility of the assumptions ? Should have visibility of the assumptions ?

13. AG Barr Proc 13 © The Delos Partnership 2003 Management of Innovation Stage/Gate Process Formal Process for Managing Project Gate 0 Gate 0 Gate 1 Gate 1 Gate 2 Gate 2 Gate 3 Gate 3 Gate 4 Gate 4 Stage 0Stage 1Stage 2Stage 3Stage 4 Review InvestigateFinancial Case DevelopTestLaunch Forecast Entered into System to drive MRP Mimics Forecast Reviewed here For accuracy

14. AG Barr Proc 14 © The Delos Partnership 2003 New Product Plan/ Marketing Activity Review Review Changes to Projects Highlight Impact on Supply Chain Communicate changes

15. AG Barr Proc 15 © The Delos Partnership 2003 New Product With Pipeline Fill Forecast

16. AG Barr Proc 16 © The Delos Partnership 2003 Integration with Supply Chain Design Purchase Intermediate Manufacture Sub-assemble Finish Distribute Cumulative Lead Time Insert New Products Here Insert New Products Here

17. AG Barr Proc 17 © The Delos Partnership 2003 Effect of New Products on Old Products Cannibalisation Definition: The impact (usually negative) of sales on old product from new product –Assess the impact:- Timing Volume Finance – Review impact on run-out of old product – Product Life cycle effect –Review close-outs

18. AG Barr Proc 18 © The Delos Partnership 2003 Effect of New Products on Old Products ItemJulAugSepOctNovDecJanFebApr 12453 Old 1001201158020102050 12468 New 120907085130150 Total10012011520011080105135150 Pipeline Fill Last Time Buys

19. AG Barr Proc 19 © The Delos Partnership 2003 Review Impact of Promotional Initiatives What do you need to know ? PRICE INCREASE/PRICE DECREASE: –When will it happen? –Which SKUs price will increase? –What is the % increase/decrease? 2 for 1 PROMOTION: –When will it start? –When will it finish? –Which SKUs will be included? –What is the % decrease? –Is this for every customer? NATIONAL PROMOTION: –When will it start? –When will it finish? –What sort of promotion is it? –Which SKUs will it be? –How much will sales increase against normal sales rate? –Will all customers take it? Needs Formal document

20. AG Barr Proc 20 © The Delos Partnership 2003 Demand Creation & Sales Planning ADVERTISING AND PROMOTIONS The planning of the promotion can be precise The impact of the promotion is imprecise Assumptions need to be recorded

21. AG Barr Proc 21 © The Delos Partnership 2003 Promotional Curve Analysis

22. AG Barr Proc 22 © The Delos Partnership 2003 Get Input From Customers Plans Will require understanding of Customers Plans Needs effective Sales Planning Process May be linked into Customer Replenishment Planning Process

23. AG Barr Proc 23 © The Delos Partnership 2003 COLLABORATIVE PLANNING - PROGRESS Data Exchange Vendor Managed Inventory Co-Managed Inventory Trading Partnership Integrated Planning and Replenishment Ability to view customer data No management process Possibly available on Internet Agreed process for managing inventory (VMI) – suppliers problem! Supplier schedules provided Agreed process for managing inventory Mutual availability of data and plans in joint systems Supplier schedules provided, and forecasts provided. Mutual sharing of long term plans Full briefing on long term strategy Joint improvement activities Joint forecast review Joint agreement on business plans and inventory strategy Joint improvement activities Time

24. AG Barr Proc 24 © The Delos Partnership 2003 Forecasting Needs a Simple Process Filter Demand Execute Forecast Capture Actual C O N S E N S U S F O R E C A S T Review Commercial Plans Review Exceptional Demand Hold Demand Review Assumptions written down and agreed

25. AG Barr Proc 25 © The Delos Partnership 2003 Sales Forecasting – Review External Events External Influence DEFINITION: Anything outside the business control that affects the forecast –Government –Environmental –Legislative –Epidemics

26. AG Barr Proc 26 © The Delos Partnership 2003 Pre-Planned Epidemic Forecast

27. AG Barr Proc 27 © The Delos Partnership 2003 Sales Forecasting Review Exceptional Demand Review large potential business -Large New Customers -Big new market –New products –Large one time demand Decide whether to include in forecast or not –Avoid probabilities –Decide on hedging strategy –Agree on acceptance of risk

28. AG Barr Proc 28 © The Delos Partnership 2003 Forecasting Needs a Simple Process Filter Demand Execute Forecast Capture Actual C O N S E N S U S F O R E C A S T Review Commercial Plans Review Exceptional Demand Hold Demand Review Assumptions written down and agreed

29. AG Barr Proc 29 © The Delos Partnership 2003 Hold Demand Review Meeting 1.Review changes 2.Agree assumptions and changes 3.Review products 4.Review customers 5.Review NPD activities 6.Review KPIs 7.Sign off the forecast

30. AG Barr Proc 30 © The Delos Partnership 2003 Demand Planner Strategy Customer Relationship Manager Sales and Marketing System Forecast Plan Manufacturing And Purchasing ERP System Consensus Forecast

31. AG Barr Proc 31 © The Delos Partnership 2003 Typical Role of Demand Planner Co-ordinates External Plan Responsible for Demand Plan Review the all of the numbers Challenge not changes the External Plan Work with Availability Planner Works with Sales and Marketing Influences Customer Service levels Inputs on Safety Stock policies Facilitates decision on customer allocation Manages the Sales Planning system Manages the Sales Planning process Enforces good behaviours