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QAD Demand Management Lance LaCross, CPA, CPIM QAD Solutions Consultant October 9, 2011 2011 Fall CAUG Session

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2 Forecasting Goals -What & When Do we Need It? Solution Overview -Basic Forecasting -Demand Management Demand Management V6.1 -Components & New Features Summary Agenda 2011 Fall CAUG Session

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3 Comprised of Two Words -Fore -Casting Forecasting Definition Fall 2011 CAUG Session Look Out Throw Out

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4 Value Chain

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5 Balance Supply vs. Demand Demand Options: Supply Options: Manufacture Order Purchase OrderDRP Order Customer OrdersForecast

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6 Example - Dice In A Craps Game Statistical Probability

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7 How are you forecasting today? -Excel? -3rd Party Package? -Crystal Ball? How many SKUs? What does your product hierarchy look like? What is your input to the forecast? Do you conduct a formal Sales & Operations Planning Meeting? What type of adjustments are made? Audience Questions

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8 Understanding and predicting customer demand is vital to manufacturers and distributors to avoid stock-outs and maintain adequate inventory levels. While forecasts are never perfect, they are necessary to prepare for actual demand. In order to maintain an optimized inventory and effective supply chain, accurate demand forecasts are imperative. Similar to a dice game - to win you want to minimize the probability of inaccurate data used to drive your organization Demand Forecasting Goals

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9 Reduce forecast error -At SKU Level More time spent in analysis versus hunting for issues -Exception based Provide an easy, consistent method for capturing inputs to the forecast -Know accuracy by sources of input -Capture thoughts on adjustments Use the forecast and customer orders to drive planning Typical Demand Forecasting Goals

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10 Twelve to Eighteen Month Visibility More Process Automation -Takes 10 hours to compile data to get to the sales staff and Export to Excel. Ability to Handle Growth -What happens if we double our business? -Getting forecasts from new acquisitions? -What if we decide to drive MRP with forecast? It has to be easy enough for the sales force to use and provide input. Sample Requirements

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11 QAD Basic Forecasting

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12 QAD Basic Forecasting

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13 QAD Basic Forecasting

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14 QAD Basic Forecasting

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15 QAD Demand Management Tool To Help With Your Navigation

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16 Demand Management: -Extensive statistical forecasting based on history, forecast, or other data series -Alerts to notify of exceptional circumstances -Inventory policies based on forecast variability and service level -Collaborative forecasting between suppliers and customers -Sales and Operations Planning actively managing demand signals to better sense demand (think of monitoring consumption instead of orders), [and] incorporating downstream data with a higher frequency of modeling (weekly or daily) -- Source: AMR Demand Management Defined

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17 Demand Management Engine Collaborative Portal Inventory Optimization Rough-cut Planning Sales & Operations Planning QADs Demand-Driven Suite

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18 Demand Management

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Collaborative Portal QAD Other ERP SCM BI S&OP 19 QADs Demand Driven Suite Informal ERP Excel SQL Access Demand Management Engine Inventory Optimization Rough Cut

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20 Sales & Operations Planning Demand Supply Demand Planners Sales & Marketing Category Management Product Management Supply Chain Operations Engineering Logistics Actual Results Reviewed & Analyzed Re-Forecast & Consensus Meeting Forecast Supply Consensus Forecast Demand Executive Review Resolve Issues Set Direction Determine Strategic Impact Executive Review Meeting

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21 Forecasting Communicating Life Cycle Management Optimizing Balancing Planning Measuring Assisting the Supply Chain

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22 Robust statistical engine Error tracking Allocation EDI, POS, and on-line data Planning bills Forecasting

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23 Daily, Weekly, Quarterly, Monthly Buckets Forecasting horizon is user defined Forecast can be shipment, order history, etc. Unlimited years of history 32 forecasting algorithms with best fit, email and on screen alerts, and 26 accuracy measurements Forecast Maintenance

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24 Statistics, Methods & Techniques

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25 Graphical & tabular display When insufficient history, uses variety of modeling approaches Forecast is user defined with hierarchy created. Change forecast through drag & drop, mass changes, tabular change Notes with email capability Forecast Maintenance - Demand Management

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Hierarchies Hierarchies are used to: -View data at aggregate levels such as Product Class, Sales Region, or Customer -Reconcile changes made at various levels -Provide history to create statistical forecasts at aggregate level Product Type Product Group Division Tools Hand Tools WrenchesHammers Power Tools Table Saws

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27 Top Down Bottom Up Middle Out Hierarchies PRODUCT CUST DIST CENTER FAMILY MARKET DEMAND-SIDE HIERARCHY PRODUCT CUST DIST CENTER PRODUCT DIST CENTER PRODUCT FAMILY SBU SUPPLY-SIDE HIERARCHY

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28 QAD Demand Management

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29 Demand Management Forecast QAD Sales History ERP DM Integration

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30 Share information Exceptions Promotions or events Reporting Security Communicating

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31 Specific calculations Profiles - Like New Items Cloning/same as Collaborate Life Cycle Management

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32 Optimize: Safety Stocks Service Levels Order Points Periods of Coverage Lead Times Optimizing

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33 Balance Supply & Demand through key resources -Equipment -Raw Materials -Labor -Subcontracting What-if Analysis Balancing

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34 Link medium to long term operations -Business goals -Operational planning -Financial planning Model effect on supply capabilities and financials Planning

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35 Improved visibility Enhanced decision making Reporting and analysis capabilities for all levels of the enterprise. Measuring

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DME 6.1 Overview Demand Management Engine -New user interface -Filters and Exceptions -Hierarchy Manager -Profile/Lifecycle Forecasting -Event Manager DME Admin Tool -New features, better control, greater flexibility relative to Base Unit Improved Planning Portal for collaboration

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DME Viewer New User Interface

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DME Viewer

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Hierarchy

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Profiles

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Custom Task Manager

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Conversions

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Conversion Groups

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Notes

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Batch Scheduler DM Engine, Admin Tool & Batch Scheduler DME Admin

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Views Available Multi Series View Graph View Data View Series Information

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Graph Filters

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Filter Management

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Exceptions Used in the DM Viewer to limit series displayed Selects series with observation data that meets a defined criteria -Example: Find SKUs with unusual growth -identify SKUs with no sales for 6 months -identify large user adjustments

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Exceptions

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Data Permission & Domains Permits system administrator to restrict access to information by job function or individual -Sales reps for Customer X could be limited to only view the historical sales and forecasts for their customer -Regional Marketing Managers could be limited to view and adjust promotional information in their regions only

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Events Events are special situations or actions that can change forecasting behavior Examples of Events: -Sales promotion expected to drive volume up 20% for a month -Store closing for remodeling will result in selling 20,000 less units over a two month range -New contract ensures the sale of 10,000 units over the next four months

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Event Manager

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Procast = Best Fit Method used to select the best fit time series forecasting techniques Judged to be one of the most accurate in the world There are over 30 other forecasting methods available including: -Slow Moving Item -Exponential Smoothing -Regression -New Product -Lifecycle

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Lifecycle Forecasting Create forecasts without demand history based on where a product is in its lifecycle Introduction Growth MaturityDecline Volume Time

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New Report Viewer New Report Viewer for DM 6.1 Template reports can be modified or new ones can be created: -Budget Variance, Lag Analysis, Margin Summary, Workflow Status, Notes/Adjustments and more Easy integration with Excel

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Standard Forecast Reports

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58 User Defined Reports

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59 Comparison Excel Output

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Provides the foundation for collaboration with key supply chain stakeholders -Sales -Marketing -Customers Planning Portal Database Server Windows 2000/2003 Server SQL 2005/2008/2010 Web Server Windows 2000/2003 Server IIS 5.1/6.0 Data Client (Windows 2000/XP/7 IE 6/7/8/9) Intranet/ internet

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Planning Portal PP Admin Tool DME Overview Planning Portal

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62 Demonstration

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63 More sophisticated forecasting techniques Forecast collaboration tool Changes to forecast easily uploaded Measure Actual to Forecast accuracy -Exceptions and Filters Document reasons for forecast adjustments -At series level or individual observations Aggregate Forecasts different views -Hierarchy Manager Help with setting safety stock levels Rough Cut Capacity Planning -Planning for projected warehouse requirements Summary

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64 QAD Demand Management Thank You For Attending! Please Fill Out Your Survey