Demand mgt in scm
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This document discusses demand management in supply chain management. It covers objectives of demand management like gathering consumer information and identifying partners. It defines types of demand like independent and dependent demand. It also covers forecasting techniques like qualitative methods like jury of executive opinion and quantitative methods like time series models, exponential smoothing, and regression analysis. The document emphasizes the strategic importance of forecasting for human resources, supply chain management, and capacity planning.
![Forecasting Time HorizonsClassified on the basis of future time horizonShort-range forecast [less than one year] Example: Planning purchasing, job scheduling, workforce levels, job assignments and production levelsMedium-range forecast [one to three years] Example: Sales planning, production planning and budgeting, cash budgeting and analyze operating plansLong-range forecast [more than three years] Example: Planning for new products, capital expenditures, facility location or expansion and R&D](https://image.slidesharecdn.com/demandmgtinscm-110522073247-phpapp02/85/Demand-mgt-in-scm-8-320.jpg)
Demand mgt in scm
- 1. Demand Management in SCMSupply Chain ManagementPresented by Radio HeadsPresented to: Mr. Abdullah Al-Amin
- 2. Introductionfocused efforts to estimate and manage customers’ demand with the intention of using this information to shape operating decisions
- 3. ObjectivesGathering and analyzing information about consumers, their problems, and their unmet needsIdentifying partners to perform the functions needed in the demand chainMoving the functions that need to be done to the channel member that can perform them most effectively and efficiently
- 4. ObjectivesSharing with other supply chain members information about consumers and customers, available technology, and logistics challenges and opportunitiesDeveloping products and services that solve customer’s problemsDeveloping and executing the best logistics methods to deliver products and services to consumers in the desired format
- 5. Types of Demand ManagementProfessor John Mentzer and Mark Moon introduced different types of demandIndependent demand: Independent demand is the amount of product demanded (by time and location) by end-use customers of the supply chain.Dependent or derived demand: An item whose demand is tied directly to the demand or production level of another item.
- 6. Independent Demand VS Dependent DemandIndependent demand items are generally finished goods while dependent demand items are generally components or sub assemblies.Independent demand items are forecasted while dependent demand item requirements can be derived based on demand for finished goods.Example: You would forecast demand for refrigerators but you would calculate how many crisper drawers are needed (2 drawers per fridge, 10 fridges next week therefore need 200 crisper drawers.)
- 7. What is Forecasting?Forecasting is the art and science of predicting future eventsHistorical dataFuture projectionMathematical modelIt may be subjective or intuitive predictionCombination-mathematical model and manager’s judgment.
- 8. Forecasting Time HorizonsClassified on the basis of future time horizonShort-range forecast [less than one year] Example: Planning purchasing, job scheduling, workforce levels, job assignments and production levelsMedium-range forecast [one to three years] Example: Sales planning, production planning and budgeting, cash budgeting and analyze operating plansLong-range forecast [more than three years] Example: Planning for new products, capital expenditures, facility location or expansion and R&D
- 9. Types of ForecastEconomic Forecast : address the business cycle by predicting;Inflation ratesMoney supplyHousing startsOther planning indicators
- 10. Types of ForecastTechnological forecast: concerned with rates of technological progress which results in;Birth of new exciting productsRequiring new plants and equipment
- 11. Types of ForecastDemand forecast: Projects demand for a company's products or servicesSales forecastProduction, capacity ad scheduling systemsServe as inputs to financial, marketing and personnel planning
- 12. Strategic Importance of ForecastingHuman ResourceHiring, training and laying off workersHiring of additional workers affects training and qualityCapacityInadequate capacity results Undependable deliveryLoss of customersLoss of market share
- 13. Strategic Importance of ForecastingSupply-Chain ManagementGood relations with suppliersEnsuing price advantages for materials and parts
- 14. Seven Steps in the Forecasting SystemDetermine the use of forecastSelect the items to be forecastedDetermine the time horizon of the forecastSelect the forecasting modelsGather the data needed to make the forecastMake the forecastValidate and implement the results
- 15. Forecasting ApproachesQualitative analysisJury of Executive opinionDelphi MethodSales Force CompositeConsumer Market SurveyQuantitative analysisTime-series ModelsNaïve ApproachMoving AverageExponential SmoothingTrend ProjectionAssociative ModelsRegression Analysis
- 16. Qualitative MethodsJury of Executive opinionGroup of high-level experts or managersIn combination with statistical modelsArrive at a group estimate of demandDelphi Method3 different participantsDecision makers: group of 5-10 expertsStaff personnel: assist decision makers by preparing, distributing, collecting and summarizing questionnaires and survey resultsRespondents: provide inputs to the decision makers before forecasting
- 17. Qualitative MethodsSales Force CompositeEstimation of each salespersonRevision to ensureCombined at district and national levelsTo reach an overall forecast
- 18. Qualitative MethodsConsumer Market SurveyInput from customers or potential customersIn regards of their future purchasing plansHelpful in preparation of forecastImproving product design and planning for new productsOverly optimistic forecast arising from customer input
- 19. Quantitative MethodsTime-series Models: Prediction on the assumption that the future is a function of the pastIt includes:Naïve approachMoving averagesExponential smoothing Trend projection
- 20. Decomposition of a Time SeriesAnalysis of time series requires:Breaking down past data into componentsAnd then projecting them forwardA time series has four components:TrendSeasonalityCyclesRandom variations
- 21. Decomposition of a Time SeriesTrend: Gradual upward and downward movement of the data over timeSeasonality: Data pattern that repeats itself after a period of days, weeks, months, or quartersCycles: Patterns in data that occur every several yearsRandom variations: Blips in data caused by chance and unusual situations
- 22. Quantitative MethodsNaïve ApproachAssumption that the demand in the next period will be equal to demand in the most recent periodMoving AveragesUse a number of historical actual data values to generate a forecastUseful if we can assume that market demands will stay fairly steady over timeMoving average = ∑ Demand in previous n periods n
- 23. Quantitative MethodsExponential SmoothingInvolves very little record keeping of past dataNew forecast = Last period’s forecast + α (last period’s actual demand-last period’s forecast)Trend ProjectionsFits a trend line to a series of historical data pointProjects the line into the future for forecasts
- 24. Quantitative MethodsAssociative Models:Incorporate the variables or factors that might influence the quantity being forecasted.Linear Regression AnalysisA straight line mathematical modelDescribes the functional relationship between independent and dependent variables