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 Forecast generation based on prior history of actual sales.

 Ability to monitor the accuracy of the forecasts and track


variances due to changes in forecasts.

 Enable the planning users to perform forecast simulations and


analysis (like what-if analysis).

 System should also allow business users to ANALYZE the forecasts


and perform updates.

 Ability to monitor and calculate the Suggested Order Quantity,


Suggested Distribution Quantities, Suggested Call back quantity
and Forecast Closing Stock for Order Planning.

 Capability to run adhoc reports on forecasts to analyze trends


and to review.
Typical Order Planning Demand - Driven Key Benefits
Challenges Planning  DEMANTRA

• Age old • Demand Sensing: • Less inventory


forecasting Uses demand • Stronger order
process signals to plan fulfillment
• High Inventory and manage • Shorter cycle
Costs- by keeping supply times
volume of stock • Demand Shaping: • Better profit
availability. Uses strategies margins
• Multiple sources and information
of data with to shape demand
human • Response:
intervention for Fulfillment based
order planning on customer
• All Order requirements
Planning Process • Collaborate
managed in Internally &
Excel, Issue in Externally
handling large • Use Your Data
volume of data. • Use Intelligence,
• Long Lead Times not just
Algorithms
 Planning for future demand scenarios
 Estimates the future demand based on market conditions
 Collaborative planning process involving internal and external
participants
 A crucial function for improving operational plans
 Optimal resource allocation
 Reduced inventory levels
 Improved customer satisfaction
 Compare and consolidate disparate forecasts
 Sales, Marketing, Manufacturing
 In units or amount
 Improved forecast accuracy
 Better statistical forecasts
 Management by exception
 Multi-dimensional OLAP for analysis (product, channel,
geography, etc…)
 User-defined exceptions
 Proactive notifications
Demand-Driven Planning
Sense Shape
 Demand Sensing: Uses demand signals to plan
Demand Demand and manage supply

 Demand Shaping: Uses strategies and


information to shape demand

Response  Demand Response: Fulfillment based on


customer requirements
to
Demand
Advanced
Collaborative
Demand Analysis Statistical
Planning
Forecasting
• Multidimensional OLAP • Time-Series Driven • Internal collaboration
for analysis • Bayesian Estimator across lines of
• User-defined alerts • Advanced analytical business.
• Graphs and reports tools • External collaboration
• Business-enabling with customers
workflows • All reside on common
data structure
 Forecast is driven by time series analysis

 Historical information is divided into two parts


 Historical Demand
 Causal factors used to explain historical demand

 Two engine phases


 Learning: Analyze history and gain information
 Forecast: Use this learned information to generate forecast
Demantra Spectrum Uses a “Best of Breed” approach to forecasting, namely
the Bayesian Blending method.
Key Capabilities of DBA Demand Management & Order Planning

 Demand Analysis
 Ability to measure previous month’s history over sales and
under sales with respect to forecast.
 Perform what-if Analysis (Forecast Simulation) by correcting the
actual historical sales (e.g. Sudden Sales) for more accurate
forecast.
 Ability to make corrections to the baseline forecast by making
base line override.
 Capability to view forecast at any aggregation level in units as
well as in values.

 Order Planning Analysis


 Systematic & automatic approach to get the Suggested Order
Quantity (SOQ), Suggested Distribution Quantity (SDQ) and Call
Back Quantity.
 Capability to view Suggested order quantity, Forecasted Closing
Quantity at any aggregation Level in Unit as well as in Value.
 Ability to know Critical Shortage as well as Excess purchase
order or wrong purchase order entered.
Run data collections to Planners Review Order
collect items, locations, Planning for SOQ &
demand data , Supply Order Planning
data and Unit Cost Exceptions

Generate baseline Planners Review


forecast in First week of Distribution Planning
Month for SDQ & DP
Exceptions

Planners Review
forecasted demand &
Exceptions Planners Review Call
back Planning for SCQ &
CP Exceptions
Run simulation

Monthly archived final


Planners send worksheets
forecast
and share information
 Hierarchy controls how data is aggregated
and organized. These are used in
worksheets, filters, import or export, and
forecasting. These Hierarchy are called
Levels in Demantra.

 Items: groups data according to


characteristics of items

 Locations: groups data according to


characteristics of locations
Group Code – the latest item code within the group

Super Class – item’s classification based on the item’s demand history


 Demand Class - Demand Classification of No of months an item has been demanded
from the first month of receipt during the historic period.
 Volume Class - Demand Classification of total sales quantity during the historic
period.
Demand Class Volume Class Super Class / Order Class Remarks
(18 Months)
A 9-18 A 70% SA AA,AB,BA,BB Fast moving items (regular order)
B 5-8 B 15% SB CB,BC,CA,AC,AD Fast moving items (regular order)
C 3-4 C 10% SC BD,CD,DA,DB,CC Slow moving items (regular order)
D 1-2 D 5% SD DC, DD Non-moving items (on customer order)
Z 0 Z 0% SZ ZZ, ZC,ZD,ZB,DZ No Order- Obsolete
Z 0 N SN ZN Items which the first receipt creation date is within 18
months
SG Items which are newly grouped or undergone a grouping
modification
SP Items that are created within the month and no sales
transaction yet
SV Items that are created within 18 months (excluding the 1st
month) and no sales transaction yet.
SX Items without any transaction for more than 24 months
(dead items).
Organization – refers to the branches of the business

Lead Time - the length of days between when an order is placed and the date
the goods are available for use

Confidence Factor – probability that an item will be most likely sold within the
particular range of months

Exclusion Factor – classify the items whether it needs to be ordered or not


 Exclusion Factor = 0 refers to the items that are either obsolete (No-
Order Obsolete) or back-to-back orders (B2B or On Customer Order)
which does not need to generate SOQ
 Exclusion Factor = 1 refers to the regular items (Normal Order) which
needs to generate SOQ
Item Purchase Type - classification for items that indicates how you order and
stock a particular item
with Exclusion Factor = 1
 Normal Orders - items which are regularly ordered from the
supplier
 On Bulk Order – items which are ordered in big quantities
 Super Bulk –items which are ordered in much bigger quantities
than On Bulk Order
 Warranty Item – items which are used for warranty purposes
 Critical Stock – necessity items and needs to be always on stock
 In-House (WIP) – component items which are used in the job cards

with Exclusion Factor = 0


 No Order – Obsolete – items which the supplier will no longer
supply to their customers and which are replaced by another item
 On Customer Order – also known as “back-to-back” orders; items
which are only purchased upon customer requisition
Series Series Definition Formula
Abbr.
Final Historical Sales total sales for a particular period of (Sales History – Sales Returns) + WIP Demands
time + KSA Demand (if applicable)
History Override allows the user to override the
collected sales history which will be
reflected as the final historical sales
and will be the basis for the baseline
forecast

Baseline Forecast system generated statistical forecast


based on final historical sales

Baseline Override allows the user to override the baseline


forecast

Forecasted Sales system generated forecast based on


final historical sales

Final Forecasted Sales final forecast including the baseline


override
Forecasted Closing quantity on stock at the end of a (On Hand + Pending PO + Pending Transfer
Quantity particular period of time Qty) – (Safety Stock Month Projected Demand
+ Open SO)
Series
Series Abbr. Definition Formula
Safety Stock Month level of extra stock (buffer) that is Lead Time + Confidence Factor
maintained to lessen the risk of stock
outs (shortfall in raw material or
packaging) due to uncertainties in
supply and demand
Safety Stock Month total of monthly forecasted sales based e.g. if safety stock month = 3
Projected Demand on the safety stock month
FFS M1 + FFS M2 + FFS M3

Suggested Order Quantity SOQ quantity which is suggested by the [((Safety Stock Month Projected Demand x
system after taking into consideration Exclusion Factor) + Open SO) – (On Hand +
the sales history and current supplies Pending PO + Pending Transfer Qty)]

Suggested Distribution SDQ suggested quantity to be distributed to (Safety Stock Month Projected Demand +
Quantity the branches from the main warehouse Open SO) – (On Hand + Pending Transfer Qty)
based on the distribution priority and
item’s organization wise super class
(distribution class)

Suggested Call Back SCQ excess stock in the branch to be send (2 Months Forecasts + Open SO) – (On Hand +
Quantity back to the main warehouse based on Pending PO - Pending Transfer Qty)
the 2 months consecutive forecast

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