Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Demand Planning

  • Login to see the comments

Demand Planning

  1. 1. PREDICTING THE FUTURE GRAEME SHEPHERD Demand planning and influences on the supply chain
  2. 2. INTRODUCTION What drives us as individuals to actively consume a product or service? Is this motivation: desire, need, want or a basic necessity? Having a product or service where and when the end customer wants to consume it is key – this takes time, money, resources and lots of inputs Often dictates the success of a business or innovation
  3. 3. CONTENTS  Define demand and where it goes  The consumer and their behaviour  Influences on demand  Product  Place  Patterns  Inputs into the Demand  Agility and Efficiency  New Product launches  Collaborative forecasting Objective: To give a holistic overview of what a demand planner does, how the consumer behaviour is analysed and how this process is managed throughout the supply chain.
  4. 4. ABOUT ME Geography and the Environment MA Hons Majestic Wine Warehouse Graduate programme Purchasing and Supply Chain Management MSc Revlon International Demand Planner Revlon UK Senior Demand Planner Unilever Category Demand Planner (FMCG) MCIPS and APICS (Pending)
  5. 5. DEFINE DEMAND AND DEMAND PLANNING Planning demand is both an art and a science where you are forecasting a likely outcome based on assumptions Understanding the consumer and their behaviour/influences are pivotal in the robustness of the forecast Essentially forecast what end customers will consume
  6. 6. WHERE DOES THE DEMAND GO? Simplistic Supply Chain Diagram (amended) (Clermiston Consulting, 2003)  Consumer at one end and suppliers at the other  Significant production takes place end to end  Suppliers of Suppliers impacts  Place of manufacture important  Cash flows up and materials flow down  Significant time lags or periods in responsiveness  Inventory builds at certain places to aid demand  Safety stocks to be a buffer  Capacity constraints Consumer
  7. 7. DEMAND BEGINS WITH THE CONSUMER AND THEIR BEHAVIOUR Thoughts FeelingsActions Situatio n The closer to the consumer a business is the greater the insights Get into the head of the consumer Behaviour alters in the situation and environment  Social, economic, demographic
  8. 8. CONSUMER BEHAVIOUR “In the factory, we make cosmetics; in the store we sell hope.” Charles Revson founder of Revlon
  9. 9. ALL THE P’S – INFLUENCES OF MARKETING  PRODUCT – products are unique and often dictate the other Ps  PRICE – what are consumers willing to pay? Is it too cheap?  PROMOTIONS – what type and is it correct?  PLACE – where is this available  Pushes and pulls in differing degrees of ferocity in
  10. 10. PRODUCT LIFECYCLE 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 Introduction Growth Maturity Decline  Products have different lifetimes – dictated by the consumer, decision makers, and competition  Demand patterns are different for the stages in the cycle  Lifecycle can be natural and evolve or be ‘manufactured’ – planned obsolescence reducing purchasing cycle (GM, 1924)  Can also be applied to a company or business – Apple
  11. 11. PLACE  Channel of proposition – bricks and/or clicks?  Retailer – behaviour, payment terms  Forecast usually planned at customer/retailer level  Number of stores – distribution and productivity  Availability – replenishment and service levels  Exclusivity – drives a perception for the consumer  Merchandised – own space or competitively led?  Where is the promotions run from – e.g. secondary space  Expectations of consumer
  12. 12. DEMAND – ALL ABOUT PATTERNS Depending on the Ps of Product, Place, Promotion and Price but drives volatility and noise in the demand pattern Undelaying patterns is a BASE FORECAST and RATE OF SALE:  It gives a ‘level’ to the forecast  What customers will purchase with no promotions and topline price  It is the foundation block in a forecast where Promotions and price changes are built on top
  13. 13. ALL ABOUT PATTERNS TREND Often depends on product lifecycle and also health of the Brand Often can direct total market Sets the magnitude of the forecast SEASONAL 0 2 4 6 8 10 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Seasonal 0 2 4 6 8 10 12 14 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Growth Decline Static Finding the causals of demand is important Drives stock holding and capacity but also targets and £$£ A clear driver that happens every year
  14. 14. ALL ABOUT PATTERNS (2) RANDOM Often driven by sales opportunities when they arise CYCLICAL Often due to wider economic factors and over longer periods 0 2 4 6 8 10 12 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Cyclical Cyclical 0 2 4 6 8 10 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Random
  15. 15. PLANNING FUTURE DEMAND Dictated by pattern of demand and the influences on the P’s Strip sales history back of all influences to = base forecast Flow base forecast into future with any underlying trends Build on assumptions of impacts and influences on the Ps Goal is to replace numbers and forecasts with knowledge and understanding = stakeholder action and alignment
  16. 16. THE INPUTS INTO THE DEMAND SIGNALExternal and internal influences create a lens to see and create demand Expert Opinion Historical data Sales estimate Market research Historical like profiling Discon / Cannibal Lifecycle Analysis
  17. 17. SOURCES OF ‘OFFICIAL’ INTELLIGENCEDATA = INFORMATION which drives changes and actions Behaviour data and information sources vary depending on sector:  Nielsen – EPOS and Market Share (limited coverage)  Kantar – product impact on market  IRI – Market reports  IGD – Research and data company  WGSN –fashion and trend  Mintel - lifestyles  Chainlink – Specific sources for sector  Brand View – competitor listings and promotions
  18. 18. AGILE AND/OR EFFICIENCY By understanding the product demand and any future impacts of consumer behaviour you can build your supply chain What do consumers expect? Sector dependant Can be exclusive or hybird Alters during a product’s lifecycleDHL (2013, p.11)
  19. 19. NEW PRODUCT LAUNCHES Some sectors rely heavily on new products and innovations Processes designed to take this from inception to execution in market Can be a game changer – need to funnel to focus Series of gates for projects to pass to funnel the creativeness Every action has a reaction – cannibalisation, discon, distribution losses If some companies stop innovating or do innovation badly they often do not last Product Developme nt Institute http: //www.pro d- dev.com/st age- gate.php (Product Development Institute,
  20. 20. DEMAND PLANNING CYCLE Collaborative forecasting Gather data and info Create forecast Resolve volume relationships Apply judgements Document (APICS, 2015)
  21. 21. COLLABORATIVE FORECASTS Process of alignment and inputs where all stakeholders have a vested interest in projections Best practice methodologies applied to drum beat of a business cycle: S&OP, IBP, 6 Sigma Highlight risks, opportunities and gaps in plans Demand is a rolling 24 month horizon Single set of numbers for the volume that drives the financial forecast A budget is a snap shot of the demand signal at a designated time Volume GSV NSV
  22. 22. CONCLUSION Demand Planning is both an art and a science The consumer drives the demand in a sector and this is created by their behaviour Interrelationship of all the Ps = the pattern of demand The demand pattern commands the type of supply chain of a product Assumptions driven by insight and intelligence from various sources Collaboration and one number mentality allowing stakeholder inputs crucial
  23. 23. Q&A
  24. 24. REFERENCES APICS (2015) Introduction to Forecasting and Demand Planning [Online] http://www.apics.org/docs/default-source/events-apics-2014-dubai/introduction-to- forecasting-and-demand-planning.pdf?sfvrsn=2 [Accessed 2nd March 2015]. Clermiston Consulting. (2003) The Supply Chain. [Online] Available from: http://www.clermiston.com.au/Supply%20Chain.htm [Accessed 2nd March 2015]. DHL (2013). Fashion Unleashed: The Agile Fashion Supply Chain [Online] Available from: http://www.dhl.co.uk/en/logistics/industry_sector_solutions/fashion_logistics/supply_ch ain_analysis_and_design.html [Accessed 2nd March 2015]. Product Development Institute (2015) Stagegate – Your Roadmap for New Product Development [Online]. Available from: http://www.prod-dev.com/stage-gate.php [Accessed 2nd March 2015]. Further Reading on Consumer: Blythe, J. (2013) Consumer Behaviour. 2nd Ed. Sage Publishing: London.

×