1 © The Delos Partnership 2003 Key Enterprise Planning Processes Customer Relationship Management...

1 © The Delos Partnership 2003

Key Enterprise Planning ProcessesKey Enterprise Planning Processes

•Customer Relationship Management•Supply Management•Innovation Management


Basic EquationsBasic Equations

Item DataBOM’s

And Routes

StockAnd

Capacity

Master Schedule

Forecasts Orders

Suppliers Factories

What do they want ?

What haveWe got ?

Whatdoes it need ?

What do we need to do ?


Demand Planning and Demand Planning and ManagementManagement

HorizonHorizon

PLANMANAGEEXECUTE

Cumulative Lead TimeCumulative Lead Time

Add or subtractTo capacity

Strong Link to

Sales and OperationsPlanning process

Capacity andMaterials“firm”

Take Orders

TodayToday


The Ten Rules of ForecastingThe Ten Rules of Forecasting1.1. A forecast is necessary for planning supply and supporting financial and A forecast is necessary for planning supply and supporting financial and

business plansbusiness plans2.2. A forecast is never going to be rightA forecast is never going to be right3.3. A forecast is wrong because the assumptions were wrongA forecast is wrong because the assumptions were wrong4.4. Accountability for the forecast rests with Sales and Marketing Accountability for the forecast rests with Sales and Marketing 5.5. Forecasting needs an application of intelligenceForecasting needs an application of intelligence6.6. More accurate forecasting comes from your customers’ customerMore accurate forecasting comes from your customers’ customer7.7. Forecasts at an aggregate level are more accurate than the detailForecasts at an aggregate level are more accurate than the detail8.8. Effective management of demand is key to managing forecast inaccuracyEffective management of demand is key to managing forecast inaccuracy9.9. A written policy for managing flexibility is essentialA written policy for managing flexibility is essential10.10. MeasuringMeasuring forecast accuracy will improve the processforecast accuracy will improve the process


Common Reasons for Not ForecastingCommon Reasons for Not ForecastingI can never make it

100% accurate

My business has toomany unforeseen

peaksMy business isdifferent - you can’t forecast it

I don’t know who’s responsible

for it anywayIt’s not in my

objectives

I’m measured on getting high sales

- so who cares about the forecast

The factory nevermake what I forecast

anyway

Nobody thanks me for it – so why

bother ?


Forecasting – DefinitionForecasting – DefinitionA forecast is a formal request to the Supply Management function…

From Sales and Marketing to

have the product, materials andCapacity available according to the quantity

and

At the time

that they anticipate the demand will occur from the Customer to ship the product to their premises


Forecasting Needs a Simple Forecasting Needs a Simple ProcessProcess

FilterDemandExecute Forecast

CaptureActual

C O N S E N S U S C O N S E N S U S F O R E C A S TF O R E C A S T

Review Commercial Plans

Review ExceptionalDemand

Hold Demand Review

Assumptions written down and agreed


Sales Forecasting: InputsSales Forecasting: Inputs• New CustomersNew Customers• New ProductsNew Products• Pricing InitiativesPricing Initiatives• Advertising And PromotionsAdvertising And Promotions• CannibalisationCannibalisation• Customers Own ForecastCustomers Own Forecast• Competitors ActivityCompetitors Activity• External FactorsExternal Factors


Customer Relationship ManagementCustomer Relationship Management

Strategy

Customer RelationshipManager

Sales and Marketing

SystemForecast

Plan

ManufacturingAnd Purchasing

ERPSystem

Consensus Forecast


Proper forecast consumption Proper forecast consumption mechanics can be crucial mechanics can be crucial to to maintaining stability in the maintaining stability in the

supply chainsupply chain

Forecast consumption mechanicsForecast consumption mechanics


Periods 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 25 25 25 25 25 25 25 25 20 20 20 20

Actual DemandProj Avail Balance

75 50 25 0 50 25 0 50 30 10 65 45

Available to PromiseCumulativeATPMaster Schedule

75 75 75

End Item Level ForecastEnd Item Level ForecastPart Number: 12345 Lead Time: 2 periods Safety Stock: 0 Min Ord Qty: 75 On Hand: 100


Customer ProfileCustomer Profile Customer X 50 per month Customer Y 10 per month Customer Z 5 per month Customers A… 35 per month

Total = 100 per month

Forecast at End Item Level


Master SchedulingMaster Scheduling

Controlling the Supply Chain


Master Scheduling ManagementMaster Scheduling Management

Horizon

PLANMANAGEEXECUTE

Cumulative Lead TimeCumulative Lead Time

Add or subtractTo capacity

Strong Link to

Sales and OperationsPlanning Process

Capacity andMaterials“firm”

Release Orders


Objectives of Master ScheduleObjectives of Master Schedule

• State forward production plan by SKU• Summarise what the business can do• Provide Available to Promise

information for Sales/Customer Service• Provide Stability to the Supply Side

– Firm Planned Orders


Cumulative Lead TimeCumulative Lead TimeRed Pen

Part Number 12345

Pen BarrelPart Number 43768

Finished NibPart Number 76452

CapPart Number 89563

Semi finished NibPart Number 76532

InkPart Number 10675

Felt tipPart Number 10783

Lead Time = 5 weeks

Lead Time = 1 weeks

Lead Time = 5 weeks

Lead Time = 4 weeks

Lead Time = 1 weeks

Lead Time = 1 weeks

CUM

LEADTIME

Lead Time = 1 weeks


Abnormal demandAbnormal demand

How to identify and how to manage


All incoming customer orders All incoming customer orders should be screened (evaluated) should be screened (evaluated)

for normal/abnormal demand for normal/abnormal demand characteristics.characteristics.

Abnormal DemandAbnormal Demand


Abnormal DemandAbnormal Demand

Periods 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 0 0 15 25 25 25 25 25 20 20 20 20

Actual Demand

10 50

Proj Avail Balance

75 50 25 0 50 25 0 50 30 10 65 45

Available to Promise

40 75 75 75

CumulativeATPMaster Schedule

75 75 75

Part Number: 12345 Lead Time: 2 periods Safety Stock: 0 Min Ord Qty: 75 On Hand: 100

Customer Z wants 100 ASAP ; can we supply it ?


When can you promise the customer that When can you promise the customer that they can have all the product ?they can have all the product ?

How much is forecast and how much How much is forecast and how much unforecast?unforecast?

How do you know how much is How do you know how much is unforecast?unforecast?

What if they do not like your promise ?What if they do not like your promise ?

Abnormal Demand WorkshopAbnormal Demand Workshop


Identifying Abnormal DemandsIdentifying Abnormal Demands• Individual Customer Order

– Demand Source• Customer• Market Sector• Trade Sector• Export vs UK

– Quantity• Size Of Order

– For that customer [e.g. > 10 for customer Y]– For any customer [e.g. > 5 for any other than X]

• % Of Forecast• Cumulative Demand

– Track Variances to date in week or month• Keep it simple !


Master SchedulerMaster SchedulerStrategy

Master Scheduler

Sales Forecasts

CustomerOrders

ManufacturingPlan

PurchasingPlan

MRPSystem

Balanced Plan


Master Scheduler’s RoleMaster Scheduler’s Role

• Review Action Messages– Reschedule In/out

• Communicate with other functions• Release orders to factory• Respond to opportunities• Manage Stability of supply chain• Attend SOP meetings


Programme ManagementProgramme Management

Integrating Innovation


InnovationInnovation

What counts as innovation ?– New product– Change to existing product : line extension– New Manufacturing process– Change to Manufacturing Process– Regulatory change– Capital Expansion– ERP Project


InnovationInnovation

All share the following issues– Need Project Plan– Need Justification– Need co-ordination– Need cross project resource management– Difficult to forecast– Needs integration into all other processes


Management of InnovationManagement of InnovationStage/Gate ProcessStage/Gate Process

Formal Process for Managing ProjectFormal Process for Managing Project

Gate0

Gate1

Gate2

Gate3

Gate4

Stage 0 Stage 1 Stage 2 Stage 3 Stage 4

Review

Investigate FinancialCase

Develop Test Launch


Projects Need to be prioritisedProjects Need to be prioritisedProject Strategic

ImportanceRisk Factor of not doing

Priority

Project A 5 5 25

Project B 5 4 20

Project C 4 4 16

…….. ……. ……. …..

Project Z 1 1 1


Management of programmesManagement of programmes


Management of InnovationManagement of InnovationNeeds Management across all the projects


Integration with Supply ChainIntegration with Supply Chain

Design

PurchaseIntermediate Manufacture

Sub-assemble

FinishDistribute

Cumulative Lead Time

Insert NewProducts Here


Bill of Activity – Link with PlanningBill of Activity – Link with Planning

Ship

Pack

ProcessValidation

DevelopProcess

SourcePacks

DevelopArtwork

SourceEquipment

DesignLayout

Lt = 2 weeks

Lt = 6 weeks Raw Material

Lt = 4 weeks

Lt = 10 weeks

Lt = 6 weeks


Integrated Business Plan

Integration of InnovationIntegration of Innovation

Innovation Supply Chain


Innovations ManagerInnovations ManagerStrategy

Innovation Manager

DevelopmentIdeas

ProjectPlans

DevelopmentPlans

Supply Plans

ProjectSystem

Prioritised Plans


Key Processes - SummaryKey Processes - Summary

• Needs integration of all activities• Needs integration of systems• Needs Policies and Procedures to ensure

control• Needs right people in place to manage the

processes• Needs people to follow the rules with

understanding

1 © The Delos Partnership 2003 Key Enterprise Planning Processes Customer Relationship Management...

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