demand management - food and beverage
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RESTRUCTURING DEMAND MANAGEMENT
EXECUTIVE PRESENTATIONFor the Food and Beverage Industry
Steve Lewin14 September 2009
Demand Management is a critical component of the Supply Chain Management process.
The Challenge
Sound Demand Management is fundamental to business planning and the efficient operation of downstream supply chain processes, and central to achieving the objectives of lowest landed product cost and a high level of customer service.
Long Range Procuremen
t
Annual Business Planning
Monthly REMerchandising
PlanningAccount
ManagementMarketing Planning
Customer Service
Order Mgmt.
Distribution Center
Operations
Inventory Mgmt.
Production Planning
Distribution Network Design
Transportation Planning
Purchasing
Demand Forecasting
Planning Processes
Supply Chain Management
The Supply Chain is being viewed today as a series of interconnected business processes
Supply Chain Service
Requirements
Order Mgmt.
Distribution Center
Operations
Demand Forecasting
Inventory Mgmt./DRP
Production Planning/MPS
Distribution Network Design
TransportationPurchasing
DemandFulfillment
Sell Through MgmtDemandMgmt
Sourcing
Create and Plan Customer Relationships
Supply Management
Establish InventoryPlan and Select
SourcesSupplier Customer
Supplier Customer
Converging Forces Create New Business Problems
xxxxx5
Competitive Forces Best Practices
Elements ofCompetition
CUSTOMER
COST
CYCLE TIME
SERVICE
CONVENIENCE
ECONOMIC GAIN
SUPPLY CHAINCONSUMER RETAILERPRIVATE LABEL
PRICING /PROMOTIONS
NEW SERVICE OFFERINGS
NEW VENDOR ALLIANCES
CATEGORY EXCLUSIVITY
GLOBAL EXPANSION
NEW ITEM INTRO/PROMO
NON-STOP
TECHNOLOGY
VMI/CR
DSD
QR/VELOCITY
ECR
Functional Silos limit visibility to Supply Chain
MicroMicro MacroMacro=
Operations/Logistics
Direct LinkLimited
Technology Support
No Integrated System Various Excel/Lotus Spreadsheets
Fortune
Functional Organizations
Sales
Marketing
Production
Food Service
Channels
International
•Forecast accuracy is monitored and problem areas identified
•Forecast responsibility is better defined and is prepared centrally
• Forecasting process receives input from major customers on a monthly or quarterly basis.
• Single Forecast
• Integrated statistical forecast based on historical sales
•Remote access and update to forecast capability
People
Processes
Technology
Migration Plan To Forecasting Excellence
• Forecast accuracy monitored and input owners accountable for results
Forecast responsibility is well defined and primarily the responsibility of the input owners
• Forecasting process includes involvement from all stakeholders such as customers, distributors etc.
•Integrated set of coordinated Forecasts
• Integrated statistical forecast based on historical and predictive factors
•Full “what if” planning
•Forecast accuracy is not monitored
•Forecast responsibility is not well defined and is prepared Ad hoc
• Forecasting process receives little or no input from stakeholders
• Numerous nonintegrated Forecast
• Statistical forecast non-integrated
•Spreadsheet based monthly reporting of forecasts
Level 1 Level 2 Level 3
= Current State = Future State
-
Marketing
OperationsBusiness Teams
Sales
ABP
MID Finance
Potential Future Vision - Demand Management Group
Discipline
Executive
MicroMacroPeop
leProcess
Technology
~
Output: Single Operational Forecast
ABP
Distribution Center
SKU/Customer or Store
Business Team
Regional/Market
Forecast AccuracyMeasurement/Accountability
Sector Plan/Brand/Year
BU Plan/Brand/Quarter
CDT Plan/Brand/Month
Shipping Orbit/UPC/Week
Customer Account/UPC/Day
Increasing Organization/
Product/Period Detail
Higher Expected Forecast Accuracy
Lower Expected Forecast Accuracy
What’s Included
Macro Forecasting Process, Tools/Systems Used, and Methodology
Micro Forecasting
Process, Tools/Systems Used, and Methodology
Finished Goods Requirements
Macro Forecast
Micro Forecast
Core Processes
• Long-Term Capacity, Purchasing, and Logistics Planning
• Sales Planning• Cost of Sales
Projection• Financial Planning
• Detailed Production Planning or Scheduling
• Transportation Planning
• Short-Term Purchasing
• Financial Planning
• Marketing• HQ Marketing• Business Teams
• MID• HQ & Field Sales• Operations• Financial Planning
• Operations• Production• Logistics• Purchasing
• Field Sales• HQ Marketing
Interfaces to Processes
Core Processes Interfaces to Processes Key Stakeholders
Key Stakeholders
• Defining appropriate systems linkages & data requirements
Goal: A Comprehensive Solution
ProcessChallenge & Redefinethe Way We Do Work
Fused Approach
• Project Success
• Cost Reduction
• Cycle Time Reduction
• Risk Management
• Builds For The Future
• Competitive Advantage
Aligns Process, People & Technology to Meet Business Objectives
Value to Enterprise
PeopleDefine Skills, Organizations,
HR Practices, and Culture
TechnologyDefine Technology
Architecture & Applications and Validate Use of
Software
Overall Project Approach
6-8 Weeks 2-4 Months 2-4 Months2-4 Months
• Leading Practices
• Business Case• Proof-of-Concept
Phase I Phase II Phase III Phase IV
Define Design Develop Deploy
• People• Process• Technolog
y• Business
Case
• Pilot• Process• Technol
ogy• People
• Application Tests
• Training• Business Case
• Communication
• Installation • Value
Achieved
Build Install
Phase I DeliverablesRefined Business Case Cost Benefit Analysis for Future State
Risk and Return Alternatives
Demand Planning Vision Current State AnalysisBenchmarking & Secondary ResearchFuture State Vision
Initial Future State Design Design OverviewPeople EnablersProcess ModelTechnology Decision
Workplan and Costs for ProjectCompletion
Master Plan - Future State DesignInitial Project Charter
Short-term ImprovementInitiatives
Quick Projects with near-term yield
Critical Success Factors
Strong Sponsorship Clear Objectives Sustained Commitment Right Team Change Management Strategy Well-defined Process Boundaries Industry Knowledge Proper Technology Consensus That Business Problem is
Solvable
Phase I-Future State DefinitionProject Fees and Timing
Elapsed TimeElapsed Time 6-8 Weeks
Key AssumptionsKey Assumptions Project is a Priority to the OrganizationIssue Resolution and Direction will be Prompt
FeesFees Estimate for Professional Services $300,000Plus Out-of-Pocket Expenses (primarily travel)
Project Organization
Steering Committee• Executive Sponsors• Marketing/Business Teams• Operations• Sales• Finance & Systems• Manufacturing• Partner Executives
Steering Committee• Executive Sponsors• Marketing/Business Teams• Operations• Sales• Finance & Systems• Manufacturing• Partner Executives
Executive SponsorsExecutive Sponsors
Org. Alignment TeamOrg. Alignment Team Change Management TeamChange Management Team Systems Integration TeamSystems Integration Team
Project Management• Client• Partner
Project Management• Client• Partner
Engagement Directors• Client• Partner
Engagement Directors• Client• Partner
Process Redesign TeamProcess Redesign Team
Subject Matter SpecialistsSubject Matter Specialists
Partner Quality AssurancePartner Quality Assurance
50,000 Foot View• We provide successful, comprehensive (people, process,
and technology) solutions that leverage our knowledge of best practices and our broad industry experience
10,000 Foot View• We have significant consumer goods manufacturing
experience and supply chain expertise to add value across your entire enterprise
Ground Level View• We have invested substantially in our audit and consulting
relationships with client enterprise, and will continue to dedicate our high quality resources to this relationship
Partner Value-add
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