Supply Chain Forecasting and Planning to Optimize Indirect Spend
Download as PPTX, PDF2 likes559 views
The document discusses the importance of supply chain forecasting and planning to optimize indirect material spend for growth in both non-manufacturing and traditional manufacturing companies. It outlines a methodology for aligning customer demand with operational and financial requirements, emphasizing the need for cost reduction, increased efficiency, and strategic resource allocation. Key steps include analyzing current states, modeling gaps, evaluating solutions, and implementing streamlined processes to enhance responsiveness to market changes.
Supply Chain Forecasting and Planning to Optimize Indirect Spend
- 1. Supply Chain Forecasting and Planning to Optimize Indirect Material Spend and Support Growth Using Supply Chain Forecasting and Planning methodology organizations can align revenue and sales with demand for indirect material and service requirements to reduce transaction cost, increase speed and efficiency, support growth while lowering total cost. This is particularly important for non-manufacturing companies and even traditional manufacturing companies as they move towards more service related revenue streams. This discussion will be an overview of steps companies can take to align customer demand, operational requirements and financial considerations to optimize indirect materials spend. Bill Kohnen Supply Chain Planning and Forecast Forum Manila Philippines May 2017
- 2. Purchased Materials and Service Greater Impact in Service Economy • Purchased Materials and Services = 50% of Revenue • Cost of Acquiring Material and Services = 10% • • Materials/Services Technology and Innovation Differentiation • Materials/Services Customer Delivery Value Creation Alignment of Revenue and Sales with Indirect Spend Requirements Will Drive Growth and Profit
- 3. • What Do We Need • Who Do We Need • When • Process to Get • Resources Needed to Obtain
- 4. Situation • Revenue Growth • Headcount • Customers • Velocity • Resources • Current State Analysis • Forecast Requirements • Model • Identify Gaps • Survey Market For Solutions • Evaluate Details of Solutions • Implement • Establish Measures • Evaluate • Adjust • Repeat Process
- 5. Current State Analysis • To Support Current Volume we need Item # Cost # Transactions Lead time Issues Computers 250 250,000 12 6 weeks Deployment Security 500 15,000 48 As Needed Transparency Catering 100 5,000 100 Many Bills Car Service 70 70 Late Bills 0 50 100 150 $0 $100,000 $200,000 $300,000 Computers Car Service Security Catering Spend vs. Transactions Spend Txns 0 1 2 3 4 5 Computers Security Car Service Catering Needed Delivery vs Actual Actual Need
- 6. Forecast Requirements Item # Cost # Transactions Lead time Issues Computers 350 350,000 12 2 weeks Deployment Security 700 25,000 48 As Needed Transparency Catering 200 10,000 100 Many Bills Car Service 110 70 Late Bills
- 7. Model
- 8. Identify Gaps • Lead time times for computers • Resources for order and pay • Cash Planning • Availability of Supplier Resources
- 9. Survey and Evaluate Solutions • Consolidation of Orders and Invoices • Add inventory for computers • Self service process for ordering standard service • Pre training and qualification of support staff • Streamline payment approval process • Establish monitoring and metrics • Cash forecast alignment with requirements
- 10. Implement • End Users • Suppliers • Corporate Finance • Site Teams • Systems • Process
- 11. Establish Measures and Monitor 0 20 40 60 80 100 Q1 Q2 Q3 Q4 Transactions 30% Reduction 0 5 10 15 Previous Current Payment Approvals Days Continued Monitoring of Revenue and Growth Plans Quarter Sufficient Funds Balance vs Forecast Q1 Y 5% Q2 N -10% Q3 Y 15% Q4 Y 5% Quarter Supply Meets Demand Q1 Y Q2 Y Q3 N Q4 Y 0 5 10 15 Process Cost Quarter Total Cost Savings Q1 5% Q2 7% Q3 3% Q4 7%
- 12. Adjust • Incorporate needs for “special events” and projects beyond plans • Format of consolidated orders • Faster more efficient process also resulted in capacity to clear old/aging issues which once address will not be regular need • Further segmented and review needs by type of growth based on employees and customer as they have different requirements • Process change expanded further and automated where possible
- 13. Repeat • Things change – market, acquisitions, turnover, new suppliers etc. • A fast, streamlined process with little in process inventory can respond to change better with less disruption.