demand management dr. ron lembke scm 461. role of demand management collect information from all...
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Demand Management
Dr. Ron LembkeSCM 461
Role of Demand Management Collect information from all demand
sources Customers Spare parts
Negotiate and Confirm shipping dates, quantities
Confirm order status, communicate changes
Different Environments Factory to customers – plant very aware of
customer needs Factory to DC – stable replenishment plan Plan vs. Forecast:
Forecast is what you think demand will be like Plan is how you will respond to demand “A manager cannot be held responsible for not getting a
forecast right.” How are you going to respond to changes in demand? You have control over the plan and execution, not demand Rain forecasted? You decide to bring umbrella or not. Planning a BBQ: 300 people? 500? Somebody decides
Independent vs. Dependent Demand Feeding manufacturing, demand for parts is
dependent on manufacturing plan Sales to customers are independent of our
(production) activities. # snowboards # tops depends on # boards to be made
Customer order decoupling point: when control of timing passes from customer to us Make to stock – Finished goods Assemble to Order – WIP Make to Order – Raw Materials Engineer to Order - suppliers
Make to Stock Customers buy finished, generic product
McDonalds’ heat lamp days Triggers signal to make more Use warehouses, DCs to fulfill demand Maybe VMI?
Assemble to Order Define customer’s order in terms of alternative
components and options Subway, In-N-Out
Configuration management: combine options properly into a buildable final product
Flexibility in combining components, options, and modules
Combinations: 31 ice cream * 4 sauces * 12 sprinkles = 1,488
Homework Figure out the total number of combinations
of some (one) thing you like to eat or drink: Go there, write up # of options, and spell it
all out for me, how many there are # lattes: soy, decaf, etc. Ice cream Pizza Beer samplers Burritos Burgers
Make/Engineer to Order No stock components to assemble
Cooking at home – could make any of the standard things you usually make: burger, pizza, chili, etc., etc.
Include Engineer to Order Tell me what you’d like – wedding dinner
Significant design element in order creation
Don’t know possibilities of what customers might buy
What do you think? Which method is best? What kinds of uncertainty are involved in
each? What determines customer service in
each? What is the decoupling point in each
system? What kinds of capacity do we need in
each?
Communication with Depts. SOP – give forecasts, get prod. Plans
Capacity: material (MTS), labor (MTO) Timing of deliveries & production
Master Production Scheduling Detailed order info to MPS Status of each order
Figs 2.5, 2.6Resource Planning
Master Production Scheduling
Sales and Operations Planning
Demand Management
Information Use Make to Knowledge
Use EDI, POS data to know what your customers are going to be ordering
(Not forecasting) Wal-Mart and Philips Forecast based on:
Sales? Demand? Shipments?
Forecasting Framework Fig. 2.7, p. 30
Aggregating Demand Long-term, or product-line forecasts more
accurate than short term or detailed forecasts Monthly: Avg = 20, std dev =2
95%: 16-24 which is +/- 20% Annual: Avg = 20 * 12 = 240 Std. Dev = 2 * sqrt(12) = 6.9
95%: 226-254, which is +/- 5.8% Easier to forecast demand for components
than for sales of particular car configurations.
Aggregating Demand Individual item forecasts must add up to
correct total Individual item percentage of total
probably constant Pyramid forecasting – bring things into
alignment Force people to accept higher targets without
“owning” them
PredictingDemand
Shared components
GrandPrix
GrandAm
GrandPrix
End of Pontiac
Last American-produced Pontiac G6 – Nov. 25, 2009
Canadian market-G3 Wave, GM Daewoo, S. Korea, Dec. 2009