Download - Demand Forecasting and Inventory Planning in Omnichannel Retail

© 2016 Openbravo Inc. All Rights Reserved. 1

Demand Forecasting and Inventory Planning in

Omnichannel Retail: Ready for the Challenge? December 1st, 2016


Today’s Presenters

Hicham Lahlou

Managing Partner

FrePPLe

Maarten Tromp

Director of Product Development

Openbravo


Today’s presentation is available to download on

the Attachment tab on the webinar page.

Visit openbravo.com/retailers/resources/overview/

Check out additional resources and don’t forget to

share them with your colleagues.

Have a question? Click on the Question tab.

Q&A will be at the end of today’s presentation.

Submit additional questions or comments after the webinar on Twitter.

Hashtag: #obravowebinar

Simple steps to increase the

value of today’s webinar experience

http://openbravo.com/retailers/resources/overview/


Introduction

Part 1: Importance of

planning in retail

Part 2: Advanced Planning

Software

Takeaways

QnAs

Agenda


Planning in retail Part 1: The Importance of Planning in Retail


SKU proliferation

Lengthening supply chains

Handling returns

Inventory accuracy

Endless aisle

End-to-end visibility

Multiple channels

New fulfillment options

Supply Chain Challenges for Omnichannel Retailers


The hig Shopper

73%

42%

40%

35%

Consumer demand is more

unpredictable

Consumers want more

localized assortments

Trading partners lack

supply chain flexibility

Consumer demand has

deteriorated significantly

Source:RSR Research

How to Predict the Unpredictable?


The importance of Forecasting

.


Demand Forecasting

Inventory Planning

Distribution Planning

Advanced Planning Solutions

ADVANCED PLANNING SOFTWARE


The high cost of bad Forecasting

634

472

Lost Sales ($bn)

Out-of-stocks

Overstocks

Total = $1.1 trillion

Source:IHL Group


When Planning goes Wrong

Photo credit: Alamy.com

• BHS ordered extra stock to keep

shoppers coming into its stores during

its Closing Down Sale

• But the plan backfired as the stores

were left with unsold stock


57%

58%

56%

63%

UK

USA

France

Germany

% shoppers who go elsewhere when experience stockouts in stores

Stockouts turn into lost Sales

Source: GT Nexus


Do NOT have formal omnichannel demand planning processes

71% Plan to upgrade their omnichannel demand planning systems within two years

41%

Advanced Demand Forecasting not the norm

Source: Boston Retail Partners


How to Predict the Future

Source: GT Nexus


Many Factors affect Demand

Market trends,

product

lifecycles,

seasons,

locations and

the economy

can all affect

demand

frequency and

levels


Key Factor is the Weather!

• Seasons make a significant difference for apparel and

home improvement retailers

• Weather sensitivity also

typically plays a big role in

demand planning for many

retailers

• But who can predict the weather?!


• More efficient supply chain management

• Improved inventory management

• Improved customer service and satisfaction

• Reduced out-of-stocks and overstocks

• Better cashflow management

• More accurate budgeting

• On-time shipments and payments

• Less back orders and returns

Better Planning brings Multiple Benefits


Demand Forecasting as Competitive Weapon

15% less inventory

17% improvement in order fulfillment

35% shorter cash-to-cash cycle

90% reduction in stockouts

Source: Gartner Group, AMR Research


Part 2: Advanced Planning Software


No formal process

exists

Ad hoc actions

with short term

and limited

visibility

Isolated planning

process

Manual planning

Plan is not up to

date

Incomplete data

(typically excel)

Limited plan

visibility

Continuous

firefighting

Consistent and

complete planning

process

Consistent data

Plan shared within

the organization

Planning process

becomes an asset

Focus on KPI

improvement

Planning process

is competitive

advantage

Undisciplined

Reactive

Proactive

Optimized

Planning Process Maturity Model

Planning a path to Maturity


Day in the life of a Planner

How do we make sure we are not exceeding

supplier capacities?

When can we ship this new order?

What quantity will I sell in 6

months from now ?

Which supplier shall I choose for

that purchase order?

Some tough questions a

planner has to answer…

What should be my safety stock for that product?

Which orders risk to be

shipped late?

Which purchase

orders should be expedited?


What is FrePPLe?

FrePPLe IS… An Advanced Planning and Scheduling Tool

(APS) • Organization of future activities

• Short term scheduling

• Mid-term planning

• Integration with other business

applications

FrePPLe IS NOT… A Business Intelligence solution with powerful

reporting on past performance

An Enterprise Resource Planning system controlling all transactions

A Manufacturing Execution System capturing ongoing activity on the shop floor

NOW

APS

ERP MES

BI

Know your Process

Demand Forecasting

Computes and manually review your forecast

Forecast Netting

Subtracts the actual orders from the forecast

Inventory Planning

Calculates your safety stock

and reorder quantities


Creates supply plans that are constrained by lead time or

material availability

Output

Generates purchase orders and distribution orders for ERP

Demand Forecasting

Forecasting Netting

Inventory Planning



Forecasting algorithm analyzes the demand history and generates

a baseline forecast for the future: Implements a pick-best choice among different forecast methods

to select the one giving the lowest forecast error

Users adjust the forecast: Override computed forecast

Correct outliers from the demand history

Force the forecast method

Demand Forecasting (1/2)


Demand Forecasting (2/2)

The forecast can be calculated at any hierarchy level

of products, customers and locations This allows users to detect trend and seasonality. The forecast is then disaggregated at the lowest level.

The forecast can also be edited at any hierarchy level This allows users to apply a forecast pattern for a group of

products, locations, and/or customers.


Net Open Sales Orders from Forecast

Short term demand consists primarily of customer sales orders

Longer term demand consists primarily of sales forecast

The forecast consumption logic reconciles both into a total demand

signal that is consistent and complete across the entire horizon

Gross Forecast: 100 Orders Already Received: 20

> Net Forecast: 80

Forecast Netting


Compute safety stock and reorder

quantity, using of the following

methods: Automatic: • Economic order quantity

(Wilson formula)

• Safety stock calculated

for desired service level

Quantity: • Fixed quantity

Period of cover: Expressed as periods

of forecasted demand

Users can override the values

per period

Inventory Planning


Computes purchase orders and distribution orders to fulfill

the demand (Forecast + Customer orders + Safety stock)

APS takes supplier constraints into consideration, such as:

• Lead times

• Priority among suppliers if multiple sourcing

• Item cost

• Minimum/multiple order quantity

• Supplier capacity

• Vacations

Balances stock among warehouses automatically



How APS Integrates with your ERP

APS

Distribution Planning (DRP)

Demand management/Forecast

Material requirement planning (MRP)

Simulation - Optimisation

ERP

Sell Replenish

Finance Control

• Products

• Warehouses • Suppliers • Unit cost • Distribution lanes • Logistic costs

• Customer orders • On hand • On order

Budget

Budget Financial KPIs

BI / Reporting

Static data Dynamic data

• Plans • Purchase orders • Distribution orders


An APS brings your planning process to a new level of maturity

Direct impact on business and faster

ROI • Improved planner productivity

• Reduced inventory

• Increased cash flow

• Improved delivery date accuracy

• Agile response to market demand

An APS helps you taking long-term

strategic decisions • Simulation capabilities (supplier

management, facilities management…)

FrePPLe Value Proposition


Key Takeaways

Customer demand is much less predictable in the

omnichannel era

Cross-channel fulfillment complicates demand

forecasting further

Bad planning causes out-of-stocks, overstocks,

customer dissatisfaction and poor financial

performance

Advanced planning software improves demand

forecasting, inventory planning and distribution

planning

The benefits include reduced inventory, improved

fullfillment and shorter cash cycles

.


Any Questions?

You can submit additional questions or

comments after the webinar on Twitter.

Hashtag: #webinar_OB

#webinar_OB


Web: www.openbravo.com/contact

Email: [email protected]

Spain Office: +34 932 725 947

France Office: +33 (0)1 70 08 73 62

India Office: +91 33 4004 7358

Mexico Office: +52 559171 1841

Thank you very much

for your attention

http://www.openbravo.com/contact

mailto:[email protected]

Download - Demand Forecasting and Inventory Planning in Omnichannel Retail

Top Related