RESTRUCTURING DEMAND MANAGEMENT

EXECUTIVE PRESENTATIONFor the Food and Beverage Industry

Steve Lewin14 September 2009

Demand Management is a critical component of the Supply Chain Management process.

The Challenge

Sound Demand Management is fundamental to business planning and the efficient operation of downstream supply chain processes, and central to achieving the objectives of lowest landed product cost and a high level of customer service.

Long Range Procuremen

t

Annual Business Planning

Monthly REMerchandising

PlanningAccount

ManagementMarketing Planning

Customer Service

Order Mgmt.

Distribution Center

Operations

Inventory Mgmt.

Production Planning

Distribution Network Design

Transportation Planning

Purchasing

Demand Forecasting

Planning Processes

Supply Chain Management

The Supply Chain is being viewed today as a series of interconnected business processes

Supply Chain Service

Requirements

Order Mgmt.

Distribution Center

Operations

Demand Forecasting

Inventory Mgmt./DRP

Production Planning/MPS

Distribution Network Design

TransportationPurchasing

DemandFulfillment

Sell Through MgmtDemandMgmt

Sourcing

Create and Plan Customer Relationships

Supply Management

Establish InventoryPlan and Select

SourcesSupplier Customer

Supplier Customer

Converging Forces Create New Business Problems

xxxxx5

Competitive Forces Best Practices

Elements ofCompetition

CUSTOMER

COST

CYCLE TIME

SERVICE

CONVENIENCE

ECONOMIC GAIN

SUPPLY CHAINCONSUMER RETAILERPRIVATE LABEL

PRICING /PROMOTIONS

NEW SERVICE OFFERINGS

NEW VENDOR ALLIANCES

CATEGORY EXCLUSIVITY

GLOBAL EXPANSION

NEW ITEM INTRO/PROMO

NON-STOP

TECHNOLOGY

VMI/CR

DSD

QR/VELOCITY

ECR

Functional Silos limit visibility to Supply Chain

MicroMicro MacroMacro=

Operations/Logistics

Direct LinkLimited

Technology Support

No Integrated System Various Excel/Lotus Spreadsheets

Fortune

Functional Organizations

Sales

Marketing

Production

Food Service

Channels

International

•Forecast accuracy is monitored and problem areas identified

•Forecast responsibility is better defined and is prepared centrally

• Forecasting process receives input from major customers on a monthly or quarterly basis.

• Single Forecast

• Integrated statistical forecast based on historical sales

•Remote access and update to forecast capability

People

Processes

Technology

Migration Plan To Forecasting Excellence

• Forecast accuracy monitored and input owners accountable for results

Forecast responsibility is well defined and primarily the responsibility of the input owners

• Forecasting process includes involvement from all stakeholders such as customers, distributors etc.

•Integrated set of coordinated Forecasts

• Integrated statistical forecast based on historical and predictive factors

•Full “what if” planning

•Forecast accuracy is not monitored

•Forecast responsibility is not well defined and is prepared Ad hoc

• Forecasting process receives little or no input from stakeholders

• Numerous nonintegrated Forecast

• Statistical forecast non-integrated

•Spreadsheet based monthly reporting of forecasts

Level 1 Level 2 Level 3

= Current State = Future State

-

Marketing

OperationsBusiness Teams

Sales

ABP

MID Finance

Potential Future Vision - Demand Management Group

Discipline

Executive

MicroMacroPeop

leProcess

Technology

~

Output: Single Operational Forecast

ABP

Distribution Center

SKU/Customer or Store

Business Team

Regional/Market

Forecast AccuracyMeasurement/Accountability

Sector Plan/Brand/Year

BU Plan/Brand/Quarter

CDT Plan/Brand/Month

Shipping Orbit/UPC/Week

Customer Account/UPC/Day

Increasing Organization/

Product/Period Detail

Higher Expected Forecast Accuracy

Lower Expected Forecast Accuracy

What’s Included

Macro Forecasting Process, Tools/Systems Used, and Methodology

Micro Forecasting

Process, Tools/Systems Used, and Methodology

Finished Goods Requirements

Macro Forecast

Micro Forecast

Core Processes

• Long-Term Capacity, Purchasing, and Logistics Planning

• Sales Planning• Cost of Sales

Projection• Financial Planning

• Detailed Production Planning or Scheduling

• Transportation Planning

• Short-Term Purchasing

• Financial Planning

• Marketing• HQ Marketing• Business Teams

• MID• HQ & Field Sales• Operations• Financial Planning

• Operations• Production• Logistics• Purchasing

• Field Sales• HQ Marketing

Interfaces to Processes

Core Processes Interfaces to Processes Key Stakeholders

Key Stakeholders

• Defining appropriate systems linkages & data requirements

Goal: A Comprehensive Solution

ProcessChallenge & Redefinethe Way We Do Work

Fused Approach

• Project Success

• Cost Reduction

• Cycle Time Reduction

• Risk Management

• Builds For The Future

• Competitive Advantage

Aligns Process, People & Technology to Meet Business Objectives

Value to Enterprise

PeopleDefine Skills, Organizations,

HR Practices, and Culture

TechnologyDefine Technology

Architecture & Applications and Validate Use of

Software

Overall Project Approach

6-8 Weeks 2-4 Months 2-4 Months2-4 Months

• Leading Practices

• Business Case• Proof-of-Concept

Phase I Phase II Phase III Phase IV

Define Design Develop Deploy

• People• Process• Technolog

y• Business

Case

• Pilot• Process• Technol

ogy• People

• Application Tests

• Training• Business Case

• Communication

• Installation • Value

Achieved

Build Install

Phase I DeliverablesRefined Business Case Cost Benefit Analysis for Future State

Risk and Return Alternatives

Demand Planning Vision Current State AnalysisBenchmarking & Secondary ResearchFuture State Vision

Initial Future State Design Design OverviewPeople EnablersProcess ModelTechnology Decision

Workplan and Costs for ProjectCompletion

Master Plan - Future State DesignInitial Project Charter

Short-term ImprovementInitiatives

Quick Projects with near-term yield

Critical Success Factors

Strong Sponsorship Clear Objectives Sustained Commitment Right Team Change Management Strategy Well-defined Process Boundaries Industry Knowledge Proper Technology Consensus That Business Problem is

Solvable

Phase I-Future State DefinitionProject Fees and Timing

Elapsed TimeElapsed Time 6-8 Weeks

Key AssumptionsKey Assumptions Project is a Priority to the OrganizationIssue Resolution and Direction will be Prompt

FeesFees Estimate for Professional Services $300,000Plus Out-of-Pocket Expenses (primarily travel)

Project Organization

Steering Committee• Executive Sponsors• Marketing/Business Teams• Operations• Sales• Finance & Systems• Manufacturing• Partner Executives

Steering Committee• Executive Sponsors• Marketing/Business Teams• Operations• Sales• Finance & Systems• Manufacturing• Partner Executives

Executive SponsorsExecutive Sponsors

Org. Alignment TeamOrg. Alignment Team Change Management TeamChange Management Team Systems Integration TeamSystems Integration Team

Project Management• Client• Partner

Project Management• Client• Partner

Engagement Directors• Client• Partner

Engagement Directors• Client• Partner

Process Redesign TeamProcess Redesign Team

Subject Matter SpecialistsSubject Matter Specialists

Partner Quality AssurancePartner Quality Assurance

50,000 Foot View• We provide successful, comprehensive (people, process,

and technology) solutions that leverage our knowledge of best practices and our broad industry experience

10,000 Foot View• We have significant consumer goods manufacturing

experience and supply chain expertise to add value across your entire enterprise

Ground Level View• We have invested substantially in our audit and consulting

relationships with client enterprise, and will continue to dedicate our high quality resources to this relationship

Partner Value-add