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Advancements in Demand Chain Management

정명진한국오라클

© 2008 Oracle Corporation – Proprietary and Confidential

Distributors &Channel Partners

OEMs

Configure& Package

Supplier

Component Mfg WebDirect

VAR /Retail

Supply Base OEMs

Distribution& Retail Channels

Customers

Contract Mfg (EMS) / Original Design Mfg (ODM)

SCM Value Chain


Demand Driven Adaptive PlanningThe demand driven company runs on real-time information

Demand Driven leaders have:• 15% less inventory• 17% stronger order

fulfillment• 35% shorter cash-to-cash

cycle times

Which translates to:• 60% better profit margins • 65% better EPS • 2-3X the ROA

Source: AMR Benchmark

Demand Supply

Product

Sense Demand Respond to

Demand

ShapeDemand


• Eliminate decision making latency by focusing on excellence in demand visibility

– Sense demand more frequently and closer to the point of consumption– Replace spreadsheets with one number demand management -

Collaborate with all constituents

• Improve your forecast accuracy– Use advanced analytics and statistics

• Shape demand– Promotion excellence and decomposition– Leverage granular demand signals (customer, channel, store, shelf)– Identify and simulate cross selling opportunities

• Evolve to real-time S&OP– Profitable demand response– Identify supply side opportunities– Define and monitor customer based metrics– Get real time visibility to sales tactics (price breaks, promotions, deals)

Oracle Demand Driven Adaptive PlanningReal-time demand sensing and collaborative consensus forecasting


Sense demand real-timeDemand Management & Advanced ForecastingDemand Signal Repositories

Real Time Sales & Operations Planning


Manufacturer OEM Retailer/Distributor Consumer

Sale

s

TimeSa

les

Time

Sale

s

TimeSales InventoriesForecasts

POS DataInventoriesForecasts

Reach Downstream to Cut The Noise


Data Integration With Oracle DSR

TPM

TPO

APS

S&OP

DRP

SNO

PLM

• More timely data to better sense, shape and respond to demand

• Reduced manual effort and cost

• Consistent data more easily leveraged across teams and applications

–SO

A M

essa

ges

–A

ggre

gate

d D

eman

d Si

gnal

s• Data sources centrally cleansed,

harmonized and aggregated• Pre-built dashboards and reports• Powerful BI capabilities • “Sense & Respond” event management

Cap

ture

Man

age

Ana

lyze

Res

pond

Inte

grat

e

• POS sales• Price• Store inventory• Promotional plans• Store replen. rules• Store forecasts

Retail Store Data

• DC shipments• DC inventory• DC replen. rules

Retail DC/ Distributor Data

• Retail loyalty• IRI/AC Nielsen• 3rd party

demographic• Causal (weather,etc.)• RFID/EPC• IMS, NDC, EDI (867,

852), Scripts, Pedigree

• Unstructured text

Other External Data

Oracle Demand Signal

Repository


REGION EAST FCST

REGION WEST FCST

REGION SOUTH FCST

US

Sense Demand Real-Time

• Demand changes get detected real-time and are instantly reflected to all constituents and exceptions are triggered automatically

STORE FORECAST

PRODUCT FORECAST

CHANNEL FORECAST

JAPAN

Region South SalesForecast QTY Change

Tokyo Store 1 Forecast Change (YEN)

MANUFACTURING FCST

MARKETING FCST

SALES FCST

HQ

TV add “camera +printer” promotionairs 12/21 8pm

Consensus Forecast

11/20 12pm:“New camerasales at 150%

of estimate”

11/18 5pm:“New photo printer sales at -25% of estimate, request TV add”

ALERT: “Problem in US Region East”

11/20 2pm:“Budget

approval for global TV add”

20th Century Fox processes real time updates from 15,000+ stores daily

Involve all constituents and forecast closer to the point of consumption


Causal Analysis

Outlier Detection

Promotion Events

Seasonality

Cyclical Patterns

Trend

5-35% improvement

History

CausalFactors

BayesianEstimator

Model A CombinedModel

Forecast

Bayesian Optimizer

CausalsCausalsAnalysisAnalysis

OutlierOutlierDetectionDetection

PromotionalPromotionalEventsEvents

SeasonalitySeasonality

TrendTrend

CyclicalCyclicalPatternsPatterns

CausalsCausalsAnalysisAnalysis

OutlierOutlierDetectionDetection

PromotionalPromotionalEventsEvents

SeasonalitySeasonality

TrendTrend

CyclicalCyclicalPatternsPatterns

Improve Forecast AccuracyDesigned for planners, not programmers (“PhD in a box”)


Sense Demand Real-TimeMonitor customer demand and respond to ensure high service levels

Disti, Product &Disti UPC #

Disti Inventory Levels

Customer & Company Forecasts

Week of Inventory Cover

Replenishment Status

ConsensusForecast

On Hand Inventory

Resolution

Actual POS

Demand VariabilityOrange: Potential OOS

Red: Current OOS

Forecast based on POS data from DistisMeasure the weeks of Inventory cover at the distis

Compare POS data with Consensus PlanIdentify potential stock outs and resolve


Sense Demand Real-Time

Partner Inputs:

XML,EDI or Manual

Partner Forecast Metrics

• Improve demand visibility with customer collaboration

• Tailor worksheets to specific customer needs

• Worksheet can be attached to a task• Direct alerts via application or email• Automate internal notification on customer

input• Field-level security tied to customer

access privileges

Collaborate with customers and measure impacts


Shape Demand for ProfitabilityPredictive Trade Planning & Optimization



New Products Introduction

• New products present forecasting challenges– Limited or no demand history for a given item– May combine characteristics of several previous products – Price points, changing market conditions may be different – Product demand changes over product life cycle

Chaining

New Product C = 30% Product A + 75% Product B

Shape Modeling

•Apply shapes, scaled for volume and time

•Re-scale base on initial demand data

Attribute-Based Forecasting

Model new item based on past behavior of other items with similar attributes

Accurately forecast demand for new products based on existing data


New Products Introduction

Derive forecast for new product and adjust forecast based on actual demand

Automatically detect outliers

View demand of comparable products based on characteristics

Accurately forecast demand for new products based on existing data


0

500

1000

1500

2000

2500

3000

Week 1 Week 6 Week 11

Cas

es

CannibalizationPre- and post-effectsCompetitive switchingCategory growthBaselineActual

Netlift

Baseline

TPR Display

0

500

1000

1500

2000

2500

3000

Week 1 Week 6 Week 11

Week

Cas

es

Actual

TPR Display

TPR Display

Product Margin $450,000 $450,000

Promotion cost $250,000 $250,000

Net profit $200,000 $200,000Promotion ROI 80% 80%

TPR Display

$150,000 $300,000

$250,000 $250,000

-$100,000 $50,000

-40% 20%

Analytics Required to Measure Real ROI

Promoted Volume Does Not Provide Complete Picture

True Promotional ROI Is Not Obvious

*. TPR : Temporary price reduction


Decomposition of the Promotional Lift

Data

Incremental

Baseline

Intelligence-Knowledge-Collaboration-Value

Baseline

Trade

Consumer

Advertising

vs.

Traditional ItemEvaluation Demantra’s Promotion Evaluation

Competitive Account

Switching

Baseline

Category Growth

Category Cannibalization

Pantry Load

Competitive Brand Switching

Baseline

Brand Growth

Brand Cannibalization

Pantry Load

Account Switching

Forward Buy

RetailerManufacturer

True Net Lift


• Compare planned versus actual results • Color coding highlights better than

expected or under performing results• Lift decomposition to identifies

components of lift including cannibalization

• Drill down to speed analysis• Exception process can route analysis

based on user defined rules

Manufacturer and Retailer Analysis


Consumer Driven TPM Process Architecture“Its All About Sell Through, Not Sell In…”

RETAILER

POSData

ReplenishmentPlan

Promotional Plan – Retailer

Driven

Corporate Demand Management Application (Oracle/Demantra RT

S&OP)

TPM Application(Oracle/Demantra)

Manufacturer Funded Trade Promotions

National Promotions Customer Specific Promotions

Profitability Review and

Approval with Senior

Management

Internal S&OP Process, Inventory Optimization to Maximize ROI on Trade Spend

TPM Case Study - Vtech


Demand Planning and TPM Analytical LinkageTPM Case Study - Vtech


TPM Case Study - Vtech

P&LP&L Item DESCRIPTION Benefit Reference

& savingSales Gross Domestic Sales Improved Service leads to instock improvement 3% Of revenue

Increased Opportunity sales as a reliable vendor 3% Of revenueSales Allowances & Adjustments Price Protection Reducing Retail inventory proportionately reduces PP -3% Of revenue Rebate Expenses Less requirement to "blow out" excess -2% Of revenue

Cost of Sales Obsolete Inventory - NRV Reduces reserves required for obsolete inventory -30% Of existing reserves Ocean Freight Amortization Optimize inbound freight to reduce costs -35% Of existing costs Air Freight Eliminate all but exceptions & emergencies -75% reference existing costs Freight on Sales Optimize outbound freight & eliminate expedites -25% reference existing costs

Net Profit (Loss) 3% to 5% improvement is achievable 3% plus

An extraordinary opportunity

Justifying the Investment & returns


Evolve to Real-Time S&OPReal-Time Sales & Operations PlanningHyperion



Evolve to Real-Time S&OP

• Identify financial and revenue goals• Analyze demand and develop sales

forecast• Synchronize plan across Finance, Sales,

Marketing, and Supply Chain • Determine potential market variables

• Review supply and demand plans• Develop constrained plan• Monitor results and respond to

deviations• Create promotions and incentives to

shape demand and close gaps

Marketing

Manufacturing

Finance

Executives

ProductDevelopment

Strategic plans Profitability

Promotional andvolume plans Service levels

Demand plans Inventory levels

Capacity plans Promotion effectiveness

Phase in and phase out products Plan accuracy

Strategic

Tactical Decisions

Sales

Make demand and supply decisions simultaneously


Zebra Synchronizes Demantra Demand Management and Oracle CRM Opportunities with Hyperion Financial Plans/Budgets as part of S&OP

Rough-CutCapacity Planning

Business Planning and Budgeting

(Hyperion)

MasterScheduling

Detailed Material/Capacity Planning

Plant & SupplierScheduling

Execution

MarketingForecast

Sales Forecast

Sales Execution

CRMOpportunities

DevelopmentPlan

MARKETING andSALES

OPERATIONS andCONTRACT MFG

FinancialPlans (Hyperion)

Production Plans (SNO)

Detailed Sales Plans

Demand Management Aggregate

Sales Plan

Sales & OperationsPlanning

(Demantra)

ASCPOracle CRM

Demantra

Real-Time S&OP Case Study


Demand DataAdjust &

Clean historical data(Demantra)

Base Line Forecast(Demantra)

Statistical, Rule-based, adaptative

Forecast)

Plan Performance Measurement

(Hyperion)And identification of areas of

improvements

Financial Plans/Budgets

(Hyperion)review, consolidation

Marketing Input(Demantra)

Pricing, Market Analysis, Seasonality, etc.

Collaboration with customer (Demantra)

Includes customer input, tracks accuracy,

adjusts if necessary

Sales Input (Demantra)New/Lost Customers

input,Regional Market changes, key customer

forecasts

Consensus Forecast(Demantra)used as an

input to supply planning

Plan Tune-Up (Demantra)Exception-based monitoring of key

demand indicators

Supply Planning, Demand Shaping

(Demantra and SNO)

Demantra

Real-Time S&OP Case Study


Hyperion generate business planning & budgetingBusiness Planning & Budgeting


Hyperion Worksheets are Generated during S&OP Process for P&L Impact View of S&OP Plans sent from Demantra

Profit & Loss Analysis


• Seeded worksheet templates for the consensus process

• Stakeholders review and adjust forecast

• Data tailored for role• Compare with

Consensus Forecast• Track accuracy of

input to the consensus process

Automate Consensus Planning Tailored worksheets for management participation

Sales Manager at customer and

product family by month

Marketing Manager at category by

quarter


Highly Interactive Simulation and Analysis

Compare scenarios for decision making

Optimize supply network and constrain

Publish working consensus forecast


Management Review - Demand Review

How has the plan changed?

Order backlog increasing?

How are we tracking to forecast?


Management Review - Supply Review

Where are we resource

constrained?

Are we supply constrained?

How are product categories

performing?

Are we producing to

plan?Supplier

overloading?


Management Review - Executive Review

How are we performing to performance

metrics?Are we on

plan financially?

Where are we behind budget?


Consumer Durables

Industrial Manufacturing

Medical Devices

We predict the impact of today’s business decisions on tomorrow’s business performanceConsumer Goods

Retail / Wholesale

Media and Entertainment

High Technology

References


Q U E S T I O N SA N S W E R S

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