Title: MEETING THE DEMANDS OF AN ON DEMAND WORLD
1MEETING THE DEMANDS OF AN ON DEMAND WORLD
2Collaborative Business Management
DEMAND MANAGEMENT
INTEGRATION
SOP
CRM
3Why 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
4Demand Management At Work
5Demand 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
6Demand 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
7Demand 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
8True Competency In Demand Management Comes From
- Management desire
- Human judgment and intervention
- Excellence in business processes
- Educated workforce organized for success
- Excellence in execution
9Demand Management
- Companies must change from functional silos
within the organization to a more open concept of
information flow and sharing.
10Demand 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.
11The 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.
12Ineffective 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)
13Danger In Collaborating On Forward Looking Plans
- Lack of vision to the true state of reality
- Different compensation programs
- New product introduction
- Optimistic management goals
14Demand 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
15Who 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
18Why 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
19Demand 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
20Demand 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
21Demand 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
22Sales 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
23Sales 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.
24Deliverables 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
25The 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.
26Long-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.
27Everyone 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.
28Organizational 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.
29World 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.
30Survival
- 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.
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