Managing Supply Chain from the Front: Demand Planning Excellence

Speaker

Julien GIRARD

Introduction

FuturMaster – Company

Worldwide representation

20 years of excellence

450 customers

50 countries

20,000 users

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FuturMaster – Competencies

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Why forecast?

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Demand Planning – Why forecast ?

Service Level and profit Respond to market growth successfully

Reduce loss of sales opportunities from Shortages

Increase sales turnover, market share and margins

Stock Optimization

Decrease inventory level (20-60%!)

Decrease obsolete, slow moving and wastages

Reduce working capital requirement

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Demand Planning – Why forecast ?

Costs reduction Minimize material and component purchasing costs

Reduce manufacturing / supply costs

Optimize Supply Chain performance Collaboration between departments

Collaboration with customers & suppliers

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Common Business Challenges?

Increase Market Complexity - Emerging and fast growing markets

Globalization of trade • Local National Regional International

Complexity of distribution network

Common business chalenges

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Increase of specialized markets • General & Traditional Trade Modern Trade

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Increase of competition

Increased Competition & Pressure on Margins and Costs

Increased promotional activity

Shortened product lifetimes

Expanded product range

Common business chalenges

Business Challenges

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No effective collaboration between different Supply Chain entities Greater number of Players - From Suppliers to Partners

Purchasing

Demand

Production

Distribution

How to forecast & Improve Accuracy?

How is the forecast build?

Forecasting Concepts

Total forecast

Baseline Forecast

Promotion/launch

Cannibalization

BOM Component

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Bundle

Forecasting Concepts – Baseline Forecast

How is the Baseline forecast built Quantitative approach • Usage of sales history to anticipate the future demand • Calculation of statistical forecast

The main components of the baseline forecast • A trend • A seasonality

Build a forecast free from non-recurrent activity (cleansed historical sales) • These cleansed historical sales are calculated by removing the exceptional (non recurrent)

events from the historical sales

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Y1 Y2 Y3 Y4

Forecasting Concepts – Baseline Forecast

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Past Future

Sales history

History statistical model

Baseline forecast

Promotion plan

Baseline Demand

Forecasting Concepts – Cannibalization concept (promotion period)

Cannibalization

Total demand

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Organization to support a sustainable forecast process

Who is involve in the Demand planning validation process? The Demand planners: Baseline forecast proposal • Usage of cleansed sales history • With statistical model for forecasting • Central in reaching the right forecast decision

The Sales: Sales forecast proposal • Initialize and define the short term promotion plan • Input their knowledge of the market • Adjust the short term forecast plan

The Marketing: Marketing plan • Input the long term promotion plan • Provide a long term view of the forecast • Initialize the launch plan (new product)

The Finance: The budget • Budget for Y & Y+1 • Last estimated • Target

Purpose of the collaborative process The Committed Forecast (one single figure should drive the entire company)

A consensus forecast agreed through the Demand review and the S&OP meeting

Forecasting Concepts – Collaborative process

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What is the key success factors?

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Key Success Factors – The Organization

What action to be taken? Build a collaborative and cross-functional process that ultimately drive to an aligned operational plan

Harmonize and Simplify processes • Clarify Roles & Responsibilities • Processes improvement • Change management

Enforce Collaboration and Accountability • Inter-departments

Build the Right organization • People • Process

A sustainable tool to support the Demand Planning process

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Ability to improve forecast accuracy

Support modeling of trend using Statistical Analysis

Improve efficiency and productivity

One tool / source

Easy to maintain

Easy to check gaps and discrepancies

80% of time in data analysis rather than data entry and trouble shooting and 20% in analysis (Low productivity)

Management by exception

Facilitate learning from historical data and activities towards improvement

Key Success Factors – The Tool

Advanced Planning solution is no longer nice to have but mandatory to support the processes and improve the performances against the competition

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Improve sustainability tool Track changes and updates

Retain knowledge with Staff turnover

Easy to share information for collaboration

Sales, Marketing, Purchasing, Logistics, Warehouse, Production and Finance

Support workflow management • Prepare Forecast by owner • Review Forecast by relevant department personnel • Entry of relevant information by relevant department personnel • Verify by owner of Forecast • Approve by department in charge

Key Success Factors – The Tool

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Thank you