Supply Chain Best Practices Consortium
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1 Supply Chain Best Practices Consortium Demand Planning Software Tools Executive Seminar Supply Chain Leadership Forum Track A, Session 6 September 12,
2 Session Scope Because of the recent introduction of this topic, this general discussion session explores the trends, highlights the challenges and covers the best practices framework for: The Demand Planning Framework & Business Processes Retail-specific Software Tools Industry-agnostic Software Tools Functionality Requirements Systems Integration Requirements Organizational Support 2
3 The Demand Planning Framework Demand Planning Forecasting Inventory Management DC Replenishment Buying Expediting Suppliers Sourcing Routine Demand Forecasting SKU Stocking Policies Allocation Merchandisng Procurement Product Development Supplier Performance Agreements Order Entry One-time Event Forecasting New SKU Forecasting Cycle Stock Policies Safety Stock Policies DC-level & Store-level SKU Disposition Financial Reserve Planning SKU Discontinuation Decisionmaking Preallocation Postallocation Sales & Operations Planning DC-to-Store Shipment Initiation DC-to-DC Transfer Shipment Initiation Production Scheduling DCs Manufacturing Stores 3
4 Demand Planning Business Processes FORECASTING SAFETY STOCK MANAGEMENT SKU Class Historical Demand Past One-time Event Actual Demand Future One-time Event Demand Historical Routine Demand Future Routine Demand Total Forecast Demand Revenue Gross Margin Demand Variability SKU Rank Lead Timeadjusted Demand Variability Class Customer Service Level Safety Stock CYCLE STOCK MANAGEMENT STOCKING POLICY Storage Costs Inventory Opportunity Costs Inventory Risk Costs Labor Costs Quality Control Costs Product-related Costs Lost Gross Margin Unit Inventory Holding Costs Acquisition Transaction Costs Theoretical Economic Order Quantity Shelf Life Limitations Processing Capacity Limitations Storage Limitations Assigned Order Quantity Manufacturing Lead Times Customer Lead Times Greater / Lessor? Customer Order Quantities Greater / Lessor? MLT Greater CLT Greater COQ Greater AOQ Greater Produce To Order Produce To Inventory 4
5 Retail-specific Demand Planning Software Tools i2 JDA/Arthur JDA/E3 JDA/Manugistics Retek (Oracle Retail) SAS Retail Terradata Transactionware (SAP Retail) 4R Systems Others 5
6 Industry-agnostic Demand Planning Software Tools Demand Solutions Foresight Infor John Galt Solutions Logic Tools Logility Oracle RedPrairie SAP SAS Viewlocity Others Manhattan Associates 6
7 Functionality Requirements SKU Ranking & Basis (Revenue/Margin/Volume) SKU Classifications & Assignment Stocking Policy - What Goes Where Service Level - By Class, Overrides Lead Time Maintenance Lead Time Variability Measurement Alerts & Performance Measurement Vendor Order Quantity and Frequency Generation of Purchase/Manufacturing Order Plan Capacity Constraints - Processing, Storage, Transportation Forecast Accuracy as Factor in Service Level Linkage Across Nodes/Tiers/Channels in the Supply Chain and Summarization 7
8 Systems Integration Requirements Integration Points Forecast from Sales Forecasting On-hand Inventory Balances from ERP Purchasing (Planned Orders & Incoming Receipts) from ERP Customer Ordering from ERP Point-of-Sale Data from Customers Lead Time and Order Quantity Data from Suppliers Integration Methods ODBC linkage XML, web services or EDI data exchange Proprietary flat file exchange Direct integration within the ERP system Other 8
9 Systems Integration Input from B&BP Point of Sale Integration A majority of companies surveyed in the Demand Planning section indicated that POS data is not interfaced with the forecasting system. Data from the Forecasting section tells us that 29% of companies completing the survey have systems that support an interface, and when it is supported, they are using it. Forecasting Connections to Manufacturing and Replenishment Systems A large majority of companies completing the Demand Planning and Sales Forecasting sections of the survey reveal that sales forecasting systems are interfaced with manufacturing production scheduling systems and replenishment systems. In addition, there is a belief that the customer history information is reliable and current. 9
10 Organizational Support Organizational units most often involved in the demand planning process: Purchasing Product Management Inventory Management Sales and Marketing Warehouse and Transportation Management Information Technology 10
11 Potential Group Discussion Points What available functionality requirements have been difficult to implement? What functionality requirements are missing from your software tools? What developments and trends would you like to see in the software marketplace? What are the systems integration challenges you currently face? What are the organizational challenges faced in deployment of an effective demand planning discipline? What are the barriers toward tighter integration with customers and suppliers for demand planning? 11
12 Benchmarking & Best Practices References Information on Demand Planning can be found in the following references: Topic: Demand Planning Sections: Systems and Integration Finance and Sales Forecasting, Inventory and Replenishment Warehousing There are also Demand Planning related question found in the Forecasting, DC, Technology and Order sections of the survey 12
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