Principles of Demand Management
2 likes1,475 views
The document discusses demand management in supply chain processes, emphasizing the importance of balancing customer requirements with supply chain capabilities. It outlines a structured approach to planning, executing, and reviewing demand management processes, including performance metrics and technology integration. A Q&A section is also included to engage participants in further discussion about the topics covered.
![SCOR® Metrics
SCOR is a Registered Trademark of ASCM/APICS
Metric: RL.1.1 Perfect Order Fulfillment
Definition: The percentage of orders meeting delivery performance
with complete and accurate documentation and no delivery
damage
Calculation: [Total perfect orders] / [Total number of orders] x 100%
Data
collection:
Data are primarily taken from deliver and deliver enable
process elements
Discussion:
An order is perfect only if ALL L2/L3 metrics are perfect. An
order must be on-time AND in-full AND right condition
AND right documentation
Diagnostic
level 2
metrics:
• RL.2.1 Percent of orders delivered in full
• RL.2.4 Perfect condition
• RL.3.19 Percent of orders/lines received defect free
• RL.3.24 Percent of orders/lines received damage free
35
© 2019 - MetaOps, Inc.](https://image.slidesharecdn.com/principlesofdemandmanagement11-19-191-191205104006/85/Principles-of-Demand-Management-35-320.jpg)
Principles of Demand Management
- 1. Principles of Demand Management Next Level Purchasing Association November 21, 2019 1 Presented by: Ron Crabtree CPIM, CIRM, CSCP, MLSSBB, SCOR-P, CSCTA © 2019 - MetaOps, Inc.
- 2. 2 Agenda © 2019 - MetaOps, Inc. • Understanding Demand Management Basics • Planning a Demand Management Process • Execution of Demand Management • Conducting a Performance Review of your Demand Management Process (and KPIs) • Q&A Forum
- 3. Let’s get a sense for your knowledge Polling Question – How you rank your skill set in this subject matter? Range of 1 to 5, 1 = Novice and 5 = Guru © 2019 - MetaOps, Inc. 3
- 4. © 2019 - MetaOps, Inc. 4 Let’s note a couple things… • Copies of this presentation’s content upon request. . . • Rules of the road: questions are good – Use questions tool
- 5. Demand Management Basics • Demand management is the supply chain management process that balances the customers' requirements with the capabilities of the supply chain. With the right process in place, management can match supply with demand proactively and execute the plan with minimal disruptions. • The process is not limited to forecasting. It includes synchronizing supply and demand, increasing flexibility, and reducing variability. https://www.researchgate.net/publication/235304082_The_Demand_ Management_Process © 2019 - MetaOps, Inc. 5
- 6. SCOR® Processes SCOR is a Registered Trademark of ASCM/APICS 6 © 2019 - MetaOps, Inc.
- 7. SCOR® Processes SCOR is a Registered Trademark of ASCM/APICS 7 © 2019 - MetaOps, Inc.
- 8. Demand Management Basics © 2019 - MetaOps, Inc. 8
- 9. Polling Question Where is YOUR sourcing organization situated in the end-to-end supply chain? A – Far left – we are mining related or farming (Tier 2) B – Middle left – we do intermediate processing (Tier 1) C – Middle – core ‘value adder’ in the stream D – Middle right – we wholesale or consolidate things before the retail/end users touch E – We are the end consumer firm/last touch before retail / consumption © 2019 - MetaOps, Inc. 9
- 10. SCOR® Plan Process SCOR is a Registered Trademark of ASCM/APICS 10 © 2019 - MetaOps, Inc.
- 11. SCOR® Business Models SCOR is a Registered Trademark of ASCM/APICS Retail Supply Chain Type = Is a hybrid: has attributes of Make to Stock & Make to Order and Seasonal (sometimes huge) swings in demand. © 2019 - MetaOps, Inc. 11
- 12. Polling Question • Which type of supply chain BEST characterizes your firm? –Make to Stock –Make to Order –Engineer To Order –Retail –Mixture .. of two or more of these types
- 13. Demand Management Basics • Understanding the nature of demand – it can be different from product to product a given firm produces / sells to its customers • No one-size-fits-all solution for most organizations © 2019 - MetaOps, Inc. 13 21 43
- 14. Demand Forecasting Polling Question © 2019 - MetaOps, Inc. 14 Which Quadrant is MOST like your firm with respect to Demand Forecasting? 1 - Low Variability / Low Volume 2 -Low Variability / High Volume 3 - High Variability / Low Volume 4 -High Variability / High Volume
- 15. Planning a Demand Management Process Demand Management Process rigor is dictated and fed information based on your realities: 1. Position in the E2E Value Delivery Stream; 2. Type of Supply Chain; 3. Nature of volatility and predictability: 4. Maturity of the Demand Planning Function inside the Enterprise – Gartner Maturity Model
- 16. Demand Driven Enterprise Maturity Models are available Many companies have already been assessed Concept is becoming more commonplace in industry Concept is effective, even in simplified application What’s your level of enterprise maturity? Example: Gartner Demand Driven Maturity Model® Registered Trademark of Gartner Research 16 © 2019 - MetaOps, Inc.
- 17. Typical Demand Planning Process Considerations: • Review / cleans outliers for a ‘normal’ PAST demand by period • Extrapolate a foreword-looking by period (statistical view) • Planner evaluation – adjust based on the item, nature of demand • Consider inputs from sales & marketing; lifecycle stage, ECN risk; Lay-out plan horizon; 3 to 60 mos. • Feasibility, X-Function Collaboration on Plan Validity – ‘what if’ analysis • Align to Engineering (ECN risk), Finance, Budget Cycles, Policies © 2019 - MetaOps, Inc. 17 Planner Modification of Demand Forecast Usage / Consumption / Sales History Forecast of Un-Edited Demand Forward-looking inputs – growth, decline, etc. Execution of Demand Plan Align the Plan to Other Functions
- 18. © QP Group Consensus Process Performance Deviations Promotion Plan Marketing Sales Sales Forecast Analyst Distribution Planning Distribution Capabilities Inventory Position Statistical Forecasts Historical Shipments Forecasting Perf Sales Forecasts Sales Adjustments Customer Info Marketing Adjustments Causal Factors Special Prod and Prom Consensus Forecasting Meeting Action Plan Activity Resp. Due Date Consensus Forecast Review forecast performance Agree on adjustments to shipment history Review special products and promotions List deviations from forecast and their causes Review, by exception, deviations between forecast methods Agree on “one number” © 2019 - MetaOps, Inc. 18
- 19. Case Study – Planning Demand for “Un-Plannable Demand” • Challenge – Expendable Packaging used for Automotive Parts – no usable history or customer demand forecast; Use it: – When you run out of returnable containers shipped back by customers – When packing infrequent orders for service parts – Building banks of inventory to manage ECNs or long PM tasks on equipment and tooling • Pallets, wood posts, corrugated boxes and inserts, plastic bags • Consumption-based triggers to replenish within vendor lead-times © 2019 - MetaOps, Inc. 19
- 20. Executing Demand Management • Simple, low variability of demand situations can be as simple as spreadsheets and Kanbans (Consumption-based triggers within lead time to replenish) – Services, some retail, routinely used items like supplies • Material Requirements Planning / ERP for Make or Engineer-to-Order products – requires forecasts, bills of materials and lead time data to function • Advanced, cutting-edge integrations of technology across the entire value stream are possible © 2019 - MetaOps, Inc. 20
- 21. 03 Integrated Planning & Operations Digital Assistants 10x Agility Autonomous Planning 10x Productivity, Expertise Digital Assistants for Key Roles Enterprise Grade Siri / Alexa 01 AI-Powered Enterprise Knowledge Graph Big Data Store Graph Data Model Intelligent Algorithms ❏ M/L Analytics ❏ D/S Match Algorithms ❏ Aggregation & Disaggregation ❏ Bi-Directional Propagation ❏ Scenario Planning ❏ Post Game Analysis 02 Data Sensors Enterprise & Market Data Structured & Unstructured Data Real Time & Batch Data Digital Transformation Platform DEMAND SENSING REVENUE PLANNING DEMAND PLANNING LONG RANGE PLANNING ANNUAL OPERATING PLAN SUPPLY CHAIN ANALYTICS DEMAND / SUPPLY MATCH ACCOUNT PLANNING INITIATIVE MANAGEMENT NPI SALES & OPERATIONS PLANNING LOGISTICS PROCUREMENT SUPPLIER COLLABORATION INTEGRATED DEMAND MANAGEMENT INTEGRATED BUSINESS PLANNING INTEGRATED SUPPLY MANAGEMENT for Integrated Planning & Business Operations Network Graph Relationships Web Scraping Natural Language and Image Processing Connected Excel IOT / Edge APIs Realtime & Batch APIs Market Knowledge Models Demand Knowledge Models Supply Chain Knowledge Models Sales Operations Market Analysts Account Sales Brand Marketing Sales Finance Demand Planners Sales Finance Executives D/S Match Planners Network Design Analysts Logistics Ops Production Ops Procurement Ops Suppliers + Competitor Intelligence Channel Intelligence Customer Intelligence Market Size Market Share Channel InventoryPOS Assortment Plans Sales Plans Initiative Plans Demand Forecasts Orders Pricing Plans NPI Plans Demand Priorities Supply Allocation Plans Distribution Plans Resource Plans Supplier Intelligence Commodity Intelligence Make Plans Inventory Plans Procurement Plans Competitors Consumers Online Retailers Distributors Market Regions Initiatives Budgets People Sales Accounts Products Ship Tos DCs Factories Material Hubs Supplier Nodes B2B Websites Social Media Email PPT Excel IOT Sensors DW ERP CRM PLM Hierarchy Graph Relationships Make Activities Source Activities Move 21 © 2019 - MetaOps, Inc. Image provided by O9 Solutions, Inc.
- 22. SCOR® Balanced Scorecard SCOR is a Registered Trademark of ASCM/APICS Conducting a Performance Review © 2019 - MetaOps, Inc. 22
- 23. SCOR® Metrics SCOR is a Registered Trademark of ASCM/APICS 23 © 2019 - MetaOps, Inc.
- 24. Balanced Score Card Concept 24 © 2019 - MetaOps, Inc. Supply Chain Balanced Scorecard - Aircraft Parts and Consumables Key Performance Metrics History Strategic Attribute Metric Actual Parity Advantage Superior Target Gap Reliability & Safety Percent of Orders Delivered in Full Enter Enter #VALUE! Delivery Performance to Supplier Commit Date 0 Documentation Accuracy - Supply Chain 0 Flights Missed % - Aircraft not Available due to Supply Chain Cause 0 Percent of Orders - planned - vs. rush, hot, AoG 25% 10% -0.15 Stock-outs frequency per month, warehouses 0 Supply Chain Cause Safety Incident Rate (Escapes impacting safe flight ops.) 0 0 Responsiveness Order Fulfillment Cycle Time (Lead times) Enter Enter Enter Enter #VALUE! Deliver to Install Cycle Time - AoG Status Aircraft (mean time) 0 Ratio of Rush Orders to Normal Replenishment 0 Source Cycle Time - Internal (request to receipt hours) 0 Source Cycle Time - External (request to receipt hours) 0 Source Cycle Time - new items identified (days) 0 Source - Return Cycle Time - Rotalbles ~ Repairables 0 0 Agility Upside Supply Chain Flexibility - Internal Enter Enter Enter Enter #VALUE! Upside Supply Chain Flexibility - External 0 Upside Supply Chain Adaptability (volume spikes in flights made) 0 Cost Total Cost to Serve, Aircraft Parts Supply Chain - % of Sales Enter Enter Enter Enter #VALUE! Transaction Cost per PO Line Received (Cost to Source, receive and provide to Maint. Ops.) 0 Freight Cost Spend for Aircraft Parts and Supplies 5,700,000$ 5,200,000$ (500,000)$ Cost for Flight Ops Supply Chain - % of Sales (indirect spend supply chain). 0 Cost to Mitigate Supply Chain Risk - (i.e., increased field inventories) 0 Warranty Recovery Dollars Annually 5,000,000$ 7,000,000$ 2,000,000$ 0 Asset Cash-to-Cash Cycle Time - Parts Days Supply Enter #VALUE! Inventory Value on-hand, Turn Over Ratio 0 0 Balanced Perspective Performance GoalsBenchmark CustomerFinancial
- 25. If you are an organization looking to: • Plan a new Procurement / Sourcing / Supply Chain Project • Reduce risks of failure in Projects • Develop skills – leaders and procurement workforce • Drive enterprise value through best practices in Supply Management • Then… 25 25 © 2019 - MetaOps, Inc.
- 26. Two Ways to Engage - #1 One (1) Day Appraisal • One Expert for a day will provide – Strategy review or Strategy Execution Plan – Identify top 3 to 5 opportunities/gaps to increase your execution plan – Roadmap to close the gaps to superior strategy execution – Estimates of value/ROI results to expect Value $4000 Expenses Only* When scheduled by November 27, 2019 for a time by December 31, 2019 (*Travel/Food/Lodging) 26
- 27. Two Ways to Engage - #2 Two (2) hr. Think Tank Session- Remote Council of Experts – 1 to 2 Experts meet with you online – Help your Leadership team get clear on the measures of effective strategy execution – Or any other pressing matter you are grappling with – Develop a go forward plan Value $600 to $1200 ($300/hr./Expert) FREE When scheduled by November 27, 2019 for a time by December 31, 2019 27 27 © 2019 - MetaOps, Inc.
- 28. Choose One 1. 1 Day Appraisal (Expenses Only) (Value $4000) – 1 MetaExpert in 1 day – Cost is Expenses Only – Travel/Food/Lodging 2. 2 hr. Think Tank Session (RCoE) (Free)- Value $600-$1200 – 1 to 2 MetaExperts – Gather online to help your Leadership team get clear on strategy performance gaps and develop a go forward plan to remedy. Take the first step: Bit.ly/ExecutiveChat (Ron Crabtree) Offer good till September 6, 2019 28
- 29. 29 What we covered today © 2019 - MetaOps, Inc. • Understanding Demand Management Basics • Planning a Demand Management Process • Execution of Demand Management • Conducting a Performance Review of your Demand Management Process (and KPIs) • Q&A Forum
- 30. Your Interests – Next Webinar • This is a BIG Topic! • Not possible to delve deeply into all aspects of Demand Management in 45 minutes • Please use the question tool now to share with David Millington what you’d like to delve into more deeply based on the topics covered today © 2019 - MetaOps, Inc. 30
- 31. Questions 31
- 32. Thank You For More information: Ron Crabtree, CPIM, CIRM, CSCP, MLSSBB, SCOR-P, CSCTA CEO and Master Architect p. 248-568-6484 rcrabtree@MetaOps.com 32 © 2019 - MetaOps, Inc.
- 33. 33 © 2019 - MetaOps, Inc.
- 34. 34 © 2019 - MetaOps, Inc.
- 35. SCOR® Metrics SCOR is a Registered Trademark of ASCM/APICS Metric: RL.1.1 Perfect Order Fulfillment Definition: The percentage of orders meeting delivery performance with complete and accurate documentation and no delivery damage Calculation: [Total perfect orders] / [Total number of orders] x 100% Data collection: Data are primarily taken from deliver and deliver enable process elements Discussion: An order is perfect only if ALL L2/L3 metrics are perfect. An order must be on-time AND in-full AND right condition AND right documentation Diagnostic level 2 metrics: • RL.2.1 Percent of orders delivered in full • RL.2.4 Perfect condition • RL.3.19 Percent of orders/lines received defect free • RL.3.24 Percent of orders/lines received damage free 35 © 2019 - MetaOps, Inc.