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Increasing Demand Insight and Forecast Accuracy with ... · deploy inventory to meet demand plan...
Transcript of Increasing Demand Insight and Forecast Accuracy with ... · deploy inventory to meet demand plan...
Increasing Demand Insight and ForecastAccuracy with Demand Sensing and Shaping
Ganesh Wadawadigi, Ph.D.VP, Supply Chain Solutions,SAP
© 2013 SAP AG. All rights reserved. 1
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Legal disclaimer
© 2013 SAP AG. All rights reserved. 2
Agenda
Industry Trends and Business Drivers
SAP Addressing the Needs
Getting Started
Wrap-Up
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Demand Network has Inherent Data Latency
Multiple layers in the demandnetwork leads to data latency
DemandSignalLatency
DemandGranularity
Multiple aggregations across thedemand network leads to loss ofgranularity
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DigitallyConnected
SociallyNetworked
BetterInformed
79% of customers spend atleast 50% of total shopping timeresearching products online(Powerreviews)
53% of customers abandonedan in-store purchase due tonegative online sentiment(Interactive Advertising BureauReport)
59% of customers are willingto try a new brand to get bettercustomer service (AmericanExpress Global CustomerBarometer)
Empowered Customers are Changing the Rules
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ProductLaunchFailures
PromotionalEffectiveness
20% lost sales due toproduct out of stock (GS1)
27% loss of sale due toproduct wanted not availablein assortment (Q&A Research& Consultancy)
75% product launches fail…(AMR)
-19% average ROI on tradepromotions (Capgemini)
Business Drivers to Address Consumer Demand andBehavior
Decline inMarketShare
10% decline in marketshare on average due torecurring out of stock(Journal of BusinessLogistics)
BrandSubstitution
82% of consumers willsubstitute and switch brandsdue to an out of stock product(Marketing Science Journal)
PriceSensitivity
52% of consumers agreethat the price of a product ismore important than brandnames (dunnhumby)
LostSales
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DigitallyConnected
Need for Demand Sensing & Shaping Capabilities
Deep Insights into CustomerNeeds
Comprehensive Market ShareAnalysis
Predict Demand and OptimallyPosition Supply
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Agenda
Industry Trends and Business Drivers
SAP Addressing the Needs
Getting Started
Wrap-Up
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Aggregated Demand Planning Needs to be Augmented
Collaborative DemandPlanning
Optimize forecasts andgenerate a consensus
demand plan
Supply NetworkPlanning
Optimally plan supply anddeploy inventory to meet
demand plan
APO-DP APO-SNP
Demand Signal Management
Enterprise Demand SensingCapture Demand Signals
Collect, harmonize, enrichall external and internaldemand signals into asingle source of truth
Analyze Demand
Develop comprehensivemarket and demand insights
Predict Demand
Granular forecasting basedon demand pattern recognition
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Cross-functional Process View
Marketing Planning and ResourceManagement
DemandSensing and
Shaping
Sales andOperationsPlanning
Sales Planningand Performance
Management
Finance
Marketing
Sales
Supply Chain Management Reviewand Analysis
DemandReview
CollaborativeDemandPlanning
DemandSensing
DemandSignal
Capture
Analyzeand
ShapeDemand
Marketing Planningand ProgramManagement
Marketing Analyticsand Performance
Management
SalesPlanning andMonitoring
Output to Supply Processes
Supply ChainSalesMarketing
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Agenda
Industry Trends and Business Drivers
SAP Addressing the Needs
SAP Demand Signal Management
SAP Enterprise Demand Sensing
Getting Started
Wrap-Up
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SAP Demand Signal Management on HANA
SAP Demand Signal Management is the enterprise application for integrating all relevantdemand signals (internal and external) to a single source of truth
RetailerPOS
SocialMedia
Market Researchdata (e.g. Nielsen)
Distributor/Wholesaler
SAPBusiness Suite
SAP Demand Signal Management
Linking additional externalinformation (e.g., weather)
DEMAND RESPONSE
Leverage data in enterprisebusiness applications
DEMAND & MARKETVISIBILITY
Increased insights withenhanced analytics
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Scalable and Holistic Approach to Leveraging Value ofDemand Signals with DSiM
External & InternalDemand Signal Upload
DataHarmonization
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Data Cleansing& Validation
Demand DataEnrichment
Integrate toDemandResponse
DemandInsights
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Benefits of a Single Source of Demand Signals
U.S. Canada U.K.
NielsenMarket ResearchTracking Data /Retail Panel
Wal-MartPOS Data
WalgreensPOS Data
Category 2
Category 2
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Category 2
Category 1
ERPInternal Data
IRIMarket ResearchTracking Data /Retail Panel
Category 2
Category 1
Category 2
Category 1
Category 2
Category 1
Category 2
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Category 2
Category 1Category 2
Category 2
Category 1
BrandPerformance in
U.S.Brand items spread
across two categories
“Local“ Market Share
1 Brand MarketShare in N.A.
Market Research TrackingData from different
providers
“Regional“ Market Share
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SalesPerformance in
Canada“Sell-In vs. Sell-Out“
comparison
Out-of-Stock Analysis
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SalesPerformance of
WalmartCross country view
“Customer language”
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CategoryManagement
Category Managementfor Walgreens in U.K.
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Category 2(Incl. competitor’s
POS data)
Category 2
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Select DSiM Use Cases
PromotionEffectiveness
Track promotion participation per store
Identify Top/Bottom 10 selling stores
Measure variations in Promoted Price Market ShareAnalysis
Monitor market trends, market sizeand competitor dynamics
Identify root causes for market sharedeclines (e.g., new competitorproduct)
ForecastAccuracy
Increase forecast accuracy byincluding POS data in the DemandPlanning process
Analyze historic sales and promotionsfor planning insights
SalesAnalysis
Analyze demand data from differentsources to spot trends
Analyze historical sales, and productlisting to adapt sales strategy
Switch between internal and external(e.g., Retailer) views
Out of StockReduction
Quickly identify stores with out ofstock and take mitigating action
Monitor Inventory levels across yournetwork and reduce carrying costs Product Launch
Success
Track store sales, distribution, priceand promotions for new products
Ensure stock availability at stores anddistribution centers
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Embedded Analytics Delivered with DSiM
Function Roles Analysis
Sales Key Account Manager / Sales DirectorSales AnalysisPromotion AnalysisOn shelf Availability
Marketing Marketing Director / Product Manager Market Share AnalysisProduct Launch
Supply ChainManagement
Head of Logistics / Supply Planner /Demand planner
Out of stock AnalysisInventory Analysis
Pre-defined analytics(with the option to define and adopt new additional analytics)
Data analysts can leverage DSiM data with predictive and data miningalgorithms from SAP Predictive Analytics
IntegrateSocialMediaData
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SAP Demand Signal Management Demo
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Build Your Own Analytics – SAP Business ObjectsExample: Linking Sell-Out Data with Weather Data
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Build Your Analytics – SAP Predictive AnalyticsExample: Store Cluster Analysis
Cluster 3Sales revenue: LowAverage number of Out of Shelfoccurrences: MediumAverage number of Out of Stockoccurrences: MediumInventory: LowNumber of promotions: High
Possible reasons/actionsPromotion not efficient enough
Strong competitorsin the neighborhood:start a marketcampaign?
Increase the inventory level?Un-list the product?Store visit to find the root-causes
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Agenda
Industry Trends and Business Drivers
SAP Addressing the Needs
SAP Demand Signal Management
SAP Enterprise Demand Sensing
Getting Started
Wrap-Up
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SAP Enterprise Demand SensingSense Short-Term Demand Patterns
Short-term Forecast Issues IncreasesInventory and Reduces Service Metrics
Enterprise Demand Sensing
Predict daily demand requirements
Apply pattern based forecasting logic forshipment and fulfillment
Sense downstream demand using external datapatterns (Planned Innovation)
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EDS Identifies Optimal Blend of Inputs to Compute Short-Term Forecasts
Adjustments
Disaggregation
Forecast patterns
Shipment patterns
Open order patterns
Optimal blend
Open ordercorrection
Predicted futurebias correction
• Daily outputs for executionsystems
• Aggregated weekly ormonthly values for planningand reporting
• Pattern Prediction
• Forecast feed to SNP forimproved deployment
Output
Optimal weighting
Pattern recognition
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Benefits Enabled by EDS
Improve short-term forecasts by 15-50%
Access actionable insights
Increase demand agility
Reduce inventory 5-8%
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Agenda
Industry Trends and Business Drivers
SAP Addressing the Needs
Getting Started
Wrap-Up
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Putting it all Together – Demand Sensing
ERP
DemandSignalMgmt
APO (Demand Planning)
S&OP
EnterpriseDemandSensing
Master Data,Delivered orders
Downstreamdemand signals
(Planned Innovation)
Forecastadjustments
Master Data,Delivered ordersOpen orders
Forecast
Short-TermForecast
S&OPForecastForecast
Downstreamdemand signals
Social Media
Downstreamdemand signals
APOSNP
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Roadmap to Business Value
DSiM
EDS
Short-term Forecastsfor Optimal Inventory Deployment
ExternalDemandSignals
InternalDemandSignals
DownstreamDemand Insights
Solution Today Planned Innovation
Demand Insights withenhanced Short-term Forecastscombining internal & external
demand signals
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Putting it all Together – Demand Shaping
More precise TPO forecasts using demand data (POS, syndicated, internal)
Enables SAP TPO to optimize promotion tactics
Timely insights in promotion performance during Retail Execution and Post-Evaluation
Insights in promotion performance with sell-in and sell-out data
Ensure performance of the participating stores and products while the promotion is still running
Ensure On-Shelf-Availability during promotion execution
SAPDemandSignal
Management SAP Trade PromotionManagement
SAP Trade PromotionOptimization
Cleansed andharmonized downstream
demand signals Forecast
Promotion Data
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Partner Ecosystem and Simplifying Consumption
POS Data Acquisition Partners(SAP ICC Certified)
DSiM Implementation Partners
Cloud offering from SAP Services
Out of the box adaptorsfor 300+ global Retailers
Pilots on SAP HANA Enterprise Cloud (HEC)http://scn.sap.com/blogs/SCM_HEC
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Agenda
Industry Trends and Business Drivers
SAP Addressing the Needs
Getting Started
Wrap-Up
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Where to Find More Information
• http://www.saphana.com/community/blogs/blog/2013/11/27/beiersdorf-leverages-hana-and-sap-demand-signal-management-to-tell-stories-from-their-data-that-marketers-love-to-read
• Blog and video on customer success story for DSiM
• http://www.saphana.com/docs/DOC-3596• Solution Brief for DSiM
• http://service.sap.com/rds-dsim• Rapid Deployment Solution (RDS) for DSiM
• http://www.sap.com/solution/lob/scm/software/enterprise-demand-sensing/index.html
• Overview and introductory video for EDS
• http://www.sap.com/bin/sapcom/downloadasset.improve-short-term-forecast-accuracy-with-a-clear-view-of-demand-pdf.html
• Solution Brief for EDS
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Key Takeaways
• Increase demand visibility downstream in the demand network bycapturing and analyzing demand signals
• Improve success of new product launches with increased customerinsights
• Increase market share with holistic and integrated view of market trendsat a local, regional, and global level
• Improve trade spend by analyzing store-level merchandising complianceand performance
• Improve forecast accuracy by predicting short-term demand patterns
• Boost sales by predicting and reducing out-of-stocks with demandpattern and trend recognition
• Lower expediting and inventory re-positioning costs with improvedshort-term forecasts
Thank You
Contact information:
Ganesh Wadawadigi, Ph.D.VP, Supply Chain SolutionsSAP [email protected]
© 2013 SAP AG. All rights reserved. 35
© 2013 SAP AG. All rights reserved.
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