AG Barr Proc 1 © The Delos Partnership 2003 Sales Forecasting and Demand Management The process.
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Transcript of AG Barr Proc 1 © The Delos Partnership 2003 Sales Forecasting and Demand Management The process.
AG Barr Proc 1 © The Delos Partnership 2003
Sales Forecasting and Demand Sales Forecasting and Demand ManagementManagement
The process
AG Barr Proc 2 © The Delos Partnership 2003
Forecasting Needs a Forecasting Needs a Simple ProcessSimple Process
Analyze History
Execute Forecast
CaptureHistory
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
AG Barr Proc 3 © The Delos Partnership 2003
1. Capture Actual1. Capture Actual
• Each month we capture Actual History
• Captured from Order Entry Software - shipments
AG Barr Proc 4 © The Delos Partnership 2003
Forecasting Needs a Forecasting Needs a Simple ProcessSimple Process
FilterDemand
Execute 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
AG Barr Proc 5 © The Delos Partnership 2003
2. Review Actual 2. Review Actual ShipmentsShipments
Look for unusual shipment, not going to be repeated
Competitor going out of business Unusual promotions Millennium bug Mistake
Beware spike caused by stock outsAug 5035Sept 6040Oct 237 StockoutNov 5750
AG Barr Proc 6 © The Delos Partnership 2003
Forecasting Needs a Forecasting Needs a Simple ProcessSimple Process
FilterDemand
Execute 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
AG Barr Proc 7 © The Delos Partnership 2003
3. Execute Statistical 3. Execute Statistical ForecastForecast• Forecast should use history to produce
trends and identify patterns
• Key influences to be detected :– Base– Trend– Seasonality
AG Barr Proc 8 © The Delos Partnership 2003
Forecasting Needs a Forecasting Needs a Simple ProcessSimple Process
FilterDemand
Execute 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
AG Barr Proc 9 © The Delos Partnership 2003
Sales Forecasting: InputsSales Forecasting: Inputs
• New Customers• New Products• Pricing Initiatives• Advertising And Promotions• Cannibalisation• Customers Own Forecast• Competitors Activity• External Factors
AG Barr Proc 10 © The Delos Partnership 2003
Sales Forecasting: InputsSales Forecasting: Inputs
• New Customers• New Products• Pricing Initiatives• Advertising And Promotions• Cannibalisation• Customers Own Forecast• Competitors Activity• External Factors
MarketingPlans
AG Barr Proc 11 © The Delos Partnership 2003
Forecast must be Forecast must be supported by Assumptionssupported by Assumptions
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
1254 145 145 156 156 170 170 135 135 135 145 160 160
1345 145 167 135 180 200 200 200 200 150 150 150 200
1256 100 200 200 200 200 200 300 300 200 200 200 200
1347 50 50 50 50 40 40 30 30 20 20 40 50
NUMBERS !
ASSUMPTIONS
AG Barr Proc 12 © The Delos Partnership 2003
WorkshopWorkshop
What are the major What are the major assumptions on which the assumptions on which the forecast is based and whoforecast is based and who
• Creates and owns the Creates and owns the assumptions ?assumptions ?
• Should have visibility of the Should have visibility of the assumptions ?assumptions ?
What are the major What are the major assumptions on which the assumptions on which the forecast is based and whoforecast is based and who
• Creates and owns the Creates and owns the assumptions ?assumptions ?
• Should have visibility of the Should have visibility of the assumptions ?assumptions ?
AG Barr Proc 13 © The Delos Partnership 2003
Management of InnovationManagement of Innovation
Stage/Gate Process
Formal Process for Managing Project
Gate0
Gate0
Gate1
Gate1
Gate2
Gate2
Gate3
Gate3
Gate4
Gate4
Stage 0 Stage 1 Stage 2 Stage 3 Stage 4
Review
Investigate FinancialCase
Develop Test Launch
Forecast Entered intoSystem to drive MRP Mimics
Forecast Reviewed hereFor accuracy
AG Barr Proc 14 © The Delos Partnership 2003
New Product Plan/New Product Plan/Marketing Activity ReviewMarketing Activity Review
•Review Changes toProjects•Highlight Impact on Supply Chain•Communicate changes
AG Barr Proc 15 © The Delos Partnership 2003
0
50
100
150
200
250
300
350
400
450
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Forecast
New Product With Pipeline New Product With Pipeline Fill ForecastFill Forecast
AG Barr Proc 16 © The Delos Partnership 2003
Integration with Supply Integration with Supply ChainChain
Design
Purchase
Intermediate Manufacture
Sub-assemble
Finish
Distribute
Cumulative Lead TimeCumulative Lead Time
Insert NewProducts Here
Insert NewProducts Here
AG Barr Proc 17 © The Delos Partnership 2003
Effect of New Products on Effect of New Products on Old ProductsOld ProductsCannibalisation
Definition: The impact (usually negative)of sales on old product from new product– Assess the impact:-
• Timing• Volume• Finance
– Review impact on run-out of old product – Product Life cycle effect
– Review close-outs
AG Barr Proc 18 © The Delos Partnership 2003
Effect of New Products on Effect of New Products on Old ProductsOld Products
Item Jul Aug Sep Oct Nov Dec Jan Feb Apr
12453Old
100 120 115 80 20 10 20 5 0
12468New
120 90 70 85 130 150
Total 100 120 115 200 110 80 105 135 150
Pipeline Fill
“Last Time Buys”
AG Barr Proc 19 © The Delos Partnership 2003
Review Impact of Review Impact of Promotional InitiativesPromotional InitiativesWhat do you need to know ?
PRICE INCREASE/PRICE DECREASE:– When will it happen?– Which SKU’s price will increase?– What is the % increase/decrease?
2 for 1 PROMOTION:– When will it start?– When will it finish?– Which SKUs will be included?– What is the % decrease?– Is this for every customer?
NATIONAL PROMOTION:– When will it start?– When will it finish?– What sort of promotion is it?– Which SKUs will it be?– How much will sales increase against
normal sales rate?– Will all customers take it?
Needs
Formal
document
AG Barr Proc 20 © The Delos Partnership 2003
Demand Creation & Sales Demand Creation & Sales PlanningPlanning
ADVERTISING AND PROMOTIONS
The planning of the promotioncan be precise
The impact of the promotionis imprecise
Assumptions need to be recorded Assumptions need to be recorded
AG Barr Proc 21 © The Delos Partnership 2003
Promotional Curve Promotional Curve AnalysisAnalysis
Effect of Promotion
-40
-20
0
20
40
60
80
100
120
140
1 2 3 4 5 6 7
Month
Unit V
olu
me
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
Ind
ex
Hist
Prom
Curve
AG Barr Proc 22 © The Delos Partnership 2003
Get Input From Customer’s Get Input From Customer’s PlansPlans• Will require understanding of Customers
Plans
• Needs effective Sales Planning Process
• May be linked into Customer Replenishment Planning Process
AG Barr Proc 23 © The Delos Partnership 2003
COLLABORATIVE PLANNING - COLLABORATIVE PLANNING - PROGRESSPROGRESS
Data Exchange
Vendor Managed Inventory
Co-ManagedInventory
Trading Partnership
Integrated Planningand Replenishment
•Ability to view customer data•No management process•Possibly available on Internet
•Agreed process for managing inventory (VMI) – supplier’s problem!
•Supplier schedules provided
•Agreed process for managing inventory•Mutual availability of data and plans in joint systems•Supplier schedules provided, and forecasts provided.
•Mutual sharing of long term plans•Full briefing on long term strategy•Joint improvement activities
•Joint forecast review•Joint agreement on business plans and inventory strategy
•Joint improvement activities
Time
AG Barr Proc 24 © The Delos Partnership 2003
Forecasting Needs a Forecasting Needs a Simple ProcessSimple Process
FilterDemand
Execute 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
AG Barr Proc 25 © The Delos Partnership 2003
Sales Forecasting – Sales Forecasting – Review External EventsReview External EventsExternal Influence
DEFINITION: Anything outside the business control that affects the forecast
– Government
– Environmental
– Legislative
– Epidemics
AG Barr Proc 26 © The Delos Partnership 2003
Pre-Planned Epidemic Pre-Planned Epidemic ForecastForecast
2 Forecasts Maintained
0
50
100
150
200
250
1 2 3 4 5 6 7 8 9
Month
Volu
me
'Epidemic'
Normal
AG Barr Proc 27 © The Delos Partnership 2003
Sales Forecasting Review Sales Forecasting Review Exceptional DemandExceptional DemandReview large potential business
- Large New Customers- Big new market– New products– Large one time demand
Decide whether to include in forecast or not– Avoid probabilities– Decide on hedging strategy– Agree on acceptance of risk
AG Barr Proc 28 © The Delos Partnership 2003
Forecasting Needs a Forecasting Needs a Simple ProcessSimple Process
FilterDemand
Execute 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
AG Barr Proc 29 © The Delos Partnership 2003
Hold Demand Review Hold Demand Review MeetingMeeting
1. Review changes2. Agree assumptions and
changes3. Review products4. Review customers5. Review NPD activities6. Review KPI’s7. Sign off the forecast
AG Barr Proc 30 © The Delos Partnership 2003
Demand PlannerDemand Planner
Strategy
Customer RelationshipManager
Sales and Marketing
SystemForecast
Plan
ManufacturingAnd Purchasing
ERPSystem
Consensus ForecastConsensus Forecast
AG Barr Proc 31 © The Delos Partnership 2003
Typical Role of Demand Typical Role of Demand PlannerPlanner• Co-ordinates External Plan• Responsible for Demand Plan• Review the all of the numbers• Challenge not changes the External Plan• Work with Availability Planner• Works with Sales and Marketing• Influences Customer Service levels• Inputs on Safety Stock policies• Facilitates decision on customer allocation• Manages the Sales Planning system • Manages the Sales Planning process• Enforces good behaviours