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MEETING THE DEMANDS OF AN ON DEMAND WORLD

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MEETING THE DEMANDS OF AN ON DEMAND WORLD Collaborative Business Management Why Is It Important to Develop A Collaborative Business Management Process? – PowerPoint PPT presentation

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Title: MEETING THE DEMANDS OF AN ON DEMAND WORLD


1
MEETING THE DEMANDS OF AN ON DEMAND WORLD
2
Collaborative Business Management

DEMAND MANAGEMENT
INTEGRATION
SOP
CRM
3
Why Is It Important to Develop A Collaborative
Business Management Process?
  • Customers benefit from improved information and
    intelligence flow
  • Alignment of all priorities throughout the entire
    value chain
  • Fact based management
  • Reduces emotion based decision making
  • Improves Profitability

4
Demand Management At Work
5
Demand Management Strategy
  • Demand Management process is formalized and
    remains centralized and focused on interface to
    Consolidated Sales Forecast, historic trend data,
    and gap reconciliation between Sales projections
    and material drive forecasts.
  • Manufacturing production plan is loaded and
    correlated with the. annual business cycle.
    Demand Management expands postponement models and
    inventory management methodology to level
    production, and improve factory utilization.
    Goal is to align with inventory reduction,
    lead-time and service level targets, set by
    Demand Management Matrix

6
Demand Management Strategy (Cont.)
  • 3. Establish a process which identifies all the
    elements to MAXIMIZE REVENUE while supporting
    Customer, Financial, Sales, Marketing and
    Operations requirements as it relates to Demand
    Management
  • 4. Establish elements of the SOP process
  • Forecasted sales bookings
  • Supply/Demand Planning (Methods, Techniques,
    Constraints)
  • Pre-SOP meetings to establish a consensus
  • Collaboration and execution

7
Demand Management Requires Skills That Go Beyond
The Use Of
  • Forecast software
  • Communicating demand schedules via the internet
    or electronic data exchange
  • Sales force automation
  • ERP/ CRM capabilities

8
True Competency In Demand Management Comes From
  • Management desire
  • Human judgment and intervention
  • Excellence in business processes
  • Educated workforce organized for success
  • Excellence in execution

9
Demand Management
  • Companies must change from functional silos
    within the organization to a more open concept of
    information flow and sharing.

10
Demand Management
  • The dynamics of business today requires companies
    to work collaboratively to solve problems and to
    meet the requirements of the customers and
    internal profit goals.

11
The Objectives Of Collaborative Business
Management Is
  • The alignment and consistent maintenance of the
    Financial, Demand and Supply plans.
  • To achieve financial objectives through
    consistent decision maintenance with regards to
    Demand, Supply and Products.

12
Ineffective Demand Management Processes
  • Customer orders greater then forecast (Poor
    customer service, Sales Revenue Delays)
  • Customers order more product or different
    product (Supply organization has changing
    priorities, Expediting)
  • Customer orders lower than forecast (Increased
    inventory)
  • Customers not ordering quantities F/C in a
    company with limited capacity (Wasted Capacity)

13
Danger In Collaborating On Forward Looking Plans
  • Lack of vision to the true state of reality
  • Different compensation programs
  • New product introduction
  • Optimistic management goals

14
Demand Planning 18 Month Planning Horizon
  • Ability to react when the demand will not
    generate the sales revenues
  • Ability to act when demand exceeds your supply
    capability
  • Ability to look out into the following year for
    strategic and tactical planning

15
Who Needs To Be Involved In The Demand Planning
Process?
  • SALES
  • MARKETING
  • PRODUCT LINE MANAGERS
  • MASTER SCHEDULING
  • PURCHASING
  • MANUFACTURING
  • FINANCE

16
  • Companies need to create accountability in all
    areas for the creation and maintenance of the
    Demand Plan

17
  • Communications is the single most important
    factor in excellent Demand Management

18
Why Do Companies Fail When It Comes To
Communications?
  • Lack of detailed processes
  • Lack of discipline in
  • Data Gathering
  • Discussion of Issues
  • Decision making
  • Poor feedback
  • Hidden agendas
  • Biass

19
Demand Management Performance Measurements
  • Develop demand plans based on A,B,and C products.
  • Measure accuracy over a rolling 3 to 6 month
    schedule
  • Measure the sum of the absolute deviations this
    process ignores the pluses and minuses effect due
    to mix.
  • Measure market share
  • Measure customer retention/acquisition
  • Measure cost and profit per customer
  • Measure return on sales
  • Measures all inventory metrics
  • Profit calculations

20
Demand Management Excellence
  • The demand plan is a total collaboration between
    Sales, Marketing, PLM, Demand Managers,
    Operations and Finance
  • The demand plan validates that PLM, Marketing,
    Selling plans and Operations plans are in
    alignment and will meet revenue goals
  • The demand plan is used to create the material
    drive plan
  • The demand plan is dynamic and is reviewed and
    updated at least monthly

21
Demand Management Excellence (Cont.)
  • The aggregated demand plan is stated in units and
    revenue plan by time period
  • All assumptions in the demand plan are tracked
    and reviewed at least monthly
  • The demand plan and business plan can be
    different.
  • Demand plan revenue is compared monthly to the
    sales revenue plan and management develops plans
    to narrow or eliminate the differences
  • Continuing education is in place to change
    culture
  • There is complete understanding that the demand
    plan is a model and must be continually monitored
    and updated

22
Sales And Operations Planning
  • The sales and operations planning process is used
    to synchronize demand, supply and financial
    planning.
  • Validation of the companys plans through the
    SOP process will enable the company to achieve
    its strategic and financial objectives

23
Sales And Operation Plan
  • The SOP is the most realistic plan that a
    company can use to meet the monthly and
    quarterly
  • Financial Goals
  • Customer Commitments
  • Operations Plans
  • Marketing Strategy
  • Engineering Changes
  • Sales Goals
  • Human Relations Goals.

24
Deliverables Of SOP
  • Distribute demand and supply information
    throughout the company
  • Improve product life cycle management
  • Provide a tool for contingency planning
  • Stabilize the amount of subassembly and component
    variability for the manufacturing, shipping, and
    procurement functions
  • Increase the accuracy of demand prediction
  • Incorporate the concepts of Lean, Team-Based
    Problem Solving and Six Sigma

25
The Plan
  • The SOP plan will typically begin with a Revenue
    Plan.
  • The plan would encompass horizon time frames that
    are commensurate with standard supplier and/or
    manufacturing lead times in the subject companys
    specific business.
  • When new products are common, a plan could easily
    have visibility out eighteen or twenty-four
    months.

26
Long-Term Benefits
  • The plan directs Operations to make available
    specific quantities of products or families
    within specific time frames.
  • It would establish future availability for
    products to assure that Sales and/or Marketing
    know what will be available to sell during that
    time period.
  • Manufacturing and Suppliers can plan capacities
    and capabilities using the same plan after
    generating the plan through the requirements
    calculation.

27
Everyone Does Their Part. . .
  • Forecasts are developed by some combination of
    Sales, Marketing and Operations.
  • The plan is agreed upon before being incorporated
    into the demand plan.
  • Operations agrees to produce to the plan.
  • Sales agrees to sell to the plan, including only
    quoting deliveries based on the plan.
  • Marketing agrees to measure it against actual and
    to be ready to change the plan within prescribed
    time frames to react to variability.
  • Engineering agrees to provide product releases
    and engineering support to meet the plan.

28
Organizational Obligations of a Well-Functioning
SOP Process
  • An objective organization to administer a
    disciplined process
  • Cross-functional participation
  • Participants who are empowered
  • Well-organized meetings with agendas and defined
    objectives
  • All functions must be represented at applicable
    meetings.

29
World Class
  • Implementation of World Class Demand and Sales
    and Operations Planning will affect the way many
    people address their responsibilities.
  • Silo elimination is a must.
  • The implementation of a World Class Demand and
    SOP process is a major culture change.
  • As the monthly cycles occur, continuous
    improvement will be the objective.
  • The SOP process will be one-of-a-kind, designed
    around the specific business needs.

30
Survival
  • To survive in today's competitive and global
    environment it becomes necessary for a company to
    achieve excellence in all strategic and tactical
    phases of planning and execution.
  • A misstep in any area can ripple through the
    company and cause disastrous results.
  • Collaboration, Communication and Cooperation
    are a must.

31
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