1. 1 © The Delos Partnership 2003 Key Enterprise Planning Processes Customer Relationship Management Supply Management Innovation Management

2. 2 © The Delos Partnership 2003 Basic Equations Item Data BOM’s And Routes Stock And Capacity Master Schedule ForecastsOrders Suppliers Factories What do they want ? What have We got ? What does it need ? What do we need to do ?

3. 3 © The Delos Partnership 2003 Demand Planning and Management Horizon PLAN MANAGEEXECUTE Cumulative Lead Time Add or subtract To capacity Strong Link to Sales and Operations Planning process Capacity and Materials “firm” Take Orders Today

4. 4 © The Delos Partnership 2003 The Ten Rules of Forecasting 1.A forecast is necessary for planning supply and supporting financial and business plans 2.A forecast is never going to be right 3.A forecast is wrong because the assumptions were wrong 4.Accountability for the forecast rests with Sales and Marketing 5.Forecasting needs an application of intelligence 6.More accurate forecasting comes from your customers’ customer 7.Forecasts at an aggregate level are more accurate than the detail 8.Effective management of demand is key to managing forecast inaccuracy 9.A written policy for managing flexibility is essential 10.Measuring forecast accuracy will improve the process

5. 5 © The Delos Partnership 2003 Common Reasons for Not Forecasting I can never make it 100% accurate My business has too many unforeseen peaks My business is different - you can’t forecast it I don’t know who’s responsible for it anyway It’s not in my objectives I’m measured on getting high sales - so who cares about the forecast The factory never make what I forecast anyway Nobody thanks me for it – so why bother ?

6. 6 © The Delos Partnership 2003 Forecasting – Definition A forecast is a formal request to the Supply Management function… From Sales and Marketing to have the product, materials and Capacity available according to the quantity and At the time that they anticipate the demand will occur from the Customer to ship the product to their premises

7. 7 © 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

8. 8 © The Delos Partnership 2003 Sales Forecasting: Inputs New CustomersNew Customers New ProductsNew Products Pricing InitiativesPricing Initiatives Advertising And PromotionsAdvertising And Promotions CannibalisationCannibalisation Customers Own ForecastCustomers Own Forecast Competitors ActivityCompetitors Activity External FactorsExternal Factors

9. 9 © The Delos Partnership 2003 Customer Relationship Management Strategy Customer Relationship Manager Sales and Marketing System Forecast Plan Manufacturing And Purchasing ERP System Consensus Forecast

10. 10 © The Delos Partnership 2003 Proper forecast consumption mechanics can be crucial to maintaining stability in the supply chain Forecast consumption mechanics

11. 11 © The Delos Partnership 2003 Periods123456789101112 Forecast 25 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

12. 12 © The Delos Partnership 2003 Customer Profile Customer X50 per month Customer Y10 per month Customer Z 5 per month Customers A… 35 per month Total = 100 per month Forecast at End Item Level

13. 13 © The Delos Partnership 2003 Master Scheduling Controlling the Supply Chain

14. 14 © The Delos Partnership 2003 Master Scheduling Management Horizon PLAN MANAGEEXECUTE Cumulative Lead Time Add or subtract To capacity Strong Link to Sales and Operations Planning Process Capacity and Materials “firm” Release Orders

15. 15 © The Delos Partnership 2003 Objectives of Master Schedule State forward production plan by SKU Summarise what the business can do Provide Available to Promise information for Sales/Customer Service Provide Stability to the Supply Side –Firm Planned Orders

16. 16 © The Delos Partnership 2003 Cumulative Lead Time Red Pen Part Number 12345 Red Pen Part Number 12345 Pen Barrel Part Number 43768 Pen Barrel Part Number 43768 Finished Nib Part Number 76452 Finished Nib Part Number 76452 Cap Part Number 89563 Cap Part Number 89563 Semi finished Nib Part Number 76532 Semi finished Nib Part Number 76532 Ink Part Number 10675 Ink Part Number 10675 Felt tip Part Number 10783 Felt tip Part Number 10783 Lead Time = 5 weeks Lead Time = 1 weeks Lead Time = 5 weeks Lead Time = 4 weeks Lead Time = 1 weeks CUMLEADTIMECUMLEADTIME

17. 17 © The Delos Partnership 2003 Abnormal demand How to identify and how to manage

18. 18 © The Delos Partnership 2003 All incoming customer orders should be screened (evaluated) for normal/abnormal demand characteristics. Abnormal Demand

19. 19 © The Delos Partnership 2003 Abnormal Demand Periods123456789101112 Forecast 001525 20 Actual Demand 1050 Proj Avail Balance 7550250502505030106545 Available to Promise 4075 Cumulative ATP Master Schedule 75 Part Number: 12345 Lead Time: 2 periods Safety Stock: 0 Min Ord Qty: 75 On Hand: 100 Customer Z wants 100 ASAP ; can we supply it ?

20. 20 © The Delos Partnership 2003 When can you promise the customer that they can have all the product ?  How much is forecast and how much unforecast?  How do you know how much is unforecast?  What if they do not like your promise ? Abnormal Demand Workshop

21. 21 © The Delos Partnership 2003 Identifying Abnormal Demands Individual Customer Order –Demand Source Customer Market Sector Trade Sector Export vs UK –Quantity Size Of Order –For that customer [e.g. > 10 for customer Y] –For any customer [e.g. > 5 for any other than X] % Of Forecast Cumulative Demand –Track Variances to date in week or month Keep it simple !

22. 22 © The Delos Partnership 2003 Master Scheduler Strategy Master Scheduler Sales Forecasts Customer Orders Manufacturing Plan Purchasing Plan MRP System Balanced Plan

23. 23 © The Delos Partnership 2003 Master Scheduler’s Role Review Action Messages –Reschedule In/out Communicate with other functions Release orders to factory Respond to opportunities Manage Stability of supply chain Attend SOP meetings

24. 24 © The Delos Partnership 2003 Programme Management Integrating Innovation

25. 25 © The Delos Partnership 2003 Innovation What counts as innovation ? –New product –Change to existing product : line extension –New Manufacturing process –Change to Manufacturing Process –Regulatory change –Capital Expansion –ERP Project

26. 26 © The Delos Partnership 2003 Innovation All share the following issues –Need Project Plan –Need Justification –Need co-ordination –Need cross project resource management –Difficult to forecast –Needs integration into all other processes

27. 27 © 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

28. 28 © The Delos Partnership 2003 Projects Need to be prioritised ProjectStrategic Importance Risk Factor of not doing Priority Project A5525 Project B5420 Project C4416 ……..……. ….. Project Z111

29. 29 © The Delos Partnership 2003 Management of programmes

30. 30 © The Delos Partnership 2003 Management of Innovation Needs Management across all the projects

31. 31 © 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

32. 32 © The Delos Partnership 2003 Bill of Activity – Link with Planning Ship Pack Process Validation Process Validation Develop Process Develop Process Source Packs Source Packs Develop Artwork Develop Artwork Source Equipment Source Equipment Design Layout Design Layout Lt = 2 weeks Lt = 6 weeks Raw Material Raw Material Lt = 4 weeks Lt = 10 weeks Lt = 10 weeks Lt = 6 weeks Lt = 6 weeks

33. 33 © The Delos Partnership 2003 Integrated Business Plan Integration of Innovation InnovationSupply Chain

34. 34 © The Delos Partnership 2003 Innovations Manager Strategy Innovation Manager Development Ideas Project Plans Development Plans Supply Plans Project System Prioritised Plans

35. 35 © The Delos Partnership 2003 Key Processes - Summary Needs integration of all activities Needs integration of systems Needs Policies and Procedures to ensure control Needs right people in place to manage the processes Needs people to follow the rules with understanding