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 Forecasting and Inventory Planning in Omnichannel Retail

5,536 views

Published on

This webinar examines why retailers need to improve their current Demand Forecasting and Inventory Planning capabilities. Leading experts from Openbravo and FrePPLe explain the importance of Advanced Planning Software in producing more reliable sales forecasts and optimizing the allocation of inventory to significantly reduce costs associated with forecast errors.

Published in: Retail
  • Be the first to comment

Demand Forecasting and Inventory Planning in Omnichannel Retail

  1. 1. © 2016 Openbravo Inc. All Rights Reserved. 1 Demand Forecasting and Inventory Planning in Omnichannel Retail: Ready for the Challenge? December 1st, 2016
  2. 2. © 2016 Openbravo Inc. All Rights Reserved. 2 Today’s Presenters Hicham Lahlou Managing Partner FrePPLe Maarten Tromp Director of Product Development Openbravo
  3. 3. © 2016 Openbravo Inc. All Rights Reserved. 3 Today’s presentation is available to download on the Attachment tab on the webinar page. Visit openbravo.com/retailers/resources/overview/ Check out additional resources and don’t forget to share them with your colleagues. Have a question? Click on the Question tab. Q&A will be at the end of today’s presentation. Submit additional questions or comments after the webinar on Twitter. Hashtag: #obravowebinar Simple steps to increase the value of today’s webinar experience
  4. 4. © 2016 Openbravo Inc. All Rights Reserved. 4  Introduction  Part 1: Importance of planning in retail  Part 2: Advanced Planning Software  Takeaways  QnAs Agenda
  5. 5. © 2016 Openbravo Inc. All Rights Reserved. 5  Planning in retailPart 1: The Importance of Planning in Retail
  6. 6. © 2016 Openbravo Inc. All Rights Reserved. 6  SKU proliferation  Lengthening supply chains  Handling returns  Inventory accuracy  Endless aisle  End-to-end visibility  Multiple channels  New fulfillment options Supply Chain Challenges for Omnichannel Retailers
  7. 7. © 2016 Openbravo Inc. All Rights Reserved. 7 The hig Shopper 73% 42% 40% 35% Consumer demand is more unpredictable Consumers want more localized assortments Trading partners lack supply chain flexibility Consumer demand has deteriorated significantly Source:RSR Research How to Predict the Unpredictable?
  8. 8. © 2016 Openbravo Inc. All Rights Reserved. 8 The importance of Forecasting .
  9. 9. © 2016 Openbravo Inc. All Rights Reserved. 9 Demand Forecasting Inventory Planning Distribution Planning Advanced Planning Solutions ADVANCED PLANNING SOFTWARE
  10. 10. © 2016 Openbravo Inc. All Rights Reserved. 10 The high cost of bad Forecasting 634 472 Lost Sales ($bn) Out-of-stocks Overstocks Total = $1.1 trillion Source:IHL Group
  11. 11. © 2016 Openbravo Inc. All Rights Reserved. 11 When Planning goes Wrong Photo credit: Alamy.com • BHS ordered extra stock to keep shoppers coming into its stores during its Closing Down Sale • But the plan backfired as the stores were left with unsold stock
  12. 12. © 2016 Openbravo Inc. All Rights Reserved. 12 57% 58% 56% 63% UK USA France Germany % shoppers who go elsewhere when experience stockouts in stores Stockouts turn into lost Sales Source: GT Nexus
  13. 13. © 2016 Openbravo Inc. All Rights Reserved. 13 Do NOT have formal omnichannel demand planning processes 71% Plan to upgrade their omnichannel demand planning systems within two years 41% Advanced Demand Forecasting not the norm Source: Boston Retail Partners
  14. 14. © 2016 Openbravo Inc. All Rights Reserved. 14 How to Predict the Future Source: GT Nexus
  15. 15. © 2016 Openbravo Inc. All Rights Reserved. 15 Many Factors affect Demand Market trends, product lifecycles, seasons, locations and the economy can all affect demand frequency and levels
  16. 16. © 2016 Openbravo Inc. All Rights Reserved. 16 Key Factor is the Weather! • Seasons make a significant difference for apparel and home improvement retailers • Weather sensitivity also typically plays a big role in demand planning for many retailers • But who can predict the weather?!
  17. 17. © 2016 Openbravo Inc. All Rights Reserved. 17 • More efficient supply chain management • Improved inventory management • Improved customer service and satisfaction • Reduced out-of-stocks and overstocks • Better cashflow management • More accurate budgeting • On-time shipments and payments • Less back orders and returns Better Planning brings Multiple Benefits
  18. 18. © 2016 Openbravo Inc. All Rights Reserved. 18 Demand Forecasting as Competitive Weapon 15% less inventory 17% improvement in order fulfillment 35% shorter cash-to-cash cycle 90% reduction in stockouts Source: Gartner Group, AMR Research
  19. 19. © 2016 Openbravo Inc. All Rights Reserved. 19 Part 2: Advanced Planning Software
  20. 20. © 2016 Openbravo Inc. All Rights Reserved. 20 No formal process exists Ad hoc actions with short term and limited visibility Isolated planning process Manual planning Plan is not up to date Incomplete data (typically excel) Limited plan visibility Continuous firefighting Consistent and complete planning process Consistent data Plan shared within the organization Planning process becomes an asset Focus on KPI improvement Planning process is competitive advantage Undisciplined Reactive Proactive Optimized Planning Process Maturity Model Planning a path to Maturity
  21. 21. © 2016 Openbravo Inc. All Rights Reserved. 21 Day in the life of a Planner How do we make sure we are not exceeding supplier capacities? When can we ship this new order? What quantity will I sell in 6 months from now ? Which supplier shall I choose for that purchase order? Some tough questions a planner has to answer… What should be my safety stock for that product? Which orders risk to be shipped late? Which purchase orders should be expedited?
  22. 22. © 2016 Openbravo Inc. All Rights Reserved. 22 What is FrePPLe? FrePPLe IS…  An Advanced Planning and Scheduling Tool (APS) • Organization of future activities • Short term scheduling • Mid-term planning • Integration with other business applications FrePPLe IS NOT…  A Business Intelligence solution with powerful reporting on past performance  An Enterprise Resource Planning system controlling all transactions  A Manufacturing Execution System capturing ongoing activity on the shop floor NOW APS ERP MES BI
  23. 23. Know your Process Demand Forecasting  Computes and manually review your forecast Forecast Netting  Subtracts the actual orders from the forecast Inventory Planning  Calculates your safety stock and reorder quantities Distribution Planning  Creates supply plans that are constrained by lead time or material availability Output  Generates purchase orders and distribution orders for ERP Demand Forecasting Forecasting Netting Inventory Planning Distribution Planning
  24. 24. © 2016 Openbravo Inc. All Rights Reserved. 24 Forecasting algorithm analyzes the demand history and generates a baseline forecast for the future:  Implements a pick-best choice among different forecast methods to select the one giving the lowest forecast error Users adjust the forecast:  Override computed forecast  Correct outliers from the demand history  Force the forecast method Demand Forecasting (1/2)
  25. 25. © 2016 Openbravo Inc. All Rights Reserved. 25 Demand Forecasting (2/2) The forecast can be calculated at any hierarchy level of products, customers and locations This allows users to detect trend and seasonality. The forecast is then disaggregated at the lowest level. The forecast can also be edited at any hierarchy level This allows users to apply a forecast pattern for a group of products, locations, and/or customers.
  26. 26. © 2016 Openbravo Inc. All Rights Reserved. 26 Net Open Sales Orders from Forecast  Short term demand consists primarily of customer sales orders  Longer term demand consists primarily of sales forecast The forecast consumption logic reconciles both into a total demand signal that is consistent and complete across the entire horizon Gross Forecast: 100  Orders Already Received: 20  > Net Forecast: 80 Forecast Netting
  27. 27. © 2016 Openbravo Inc. All Rights Reserved. 27 Compute safety stock and reorder quantity, using of the following methods:  Automatic: • Economic order quantity (Wilson formula) • Safety stock calculated for desired service level  Quantity: • Fixed quantity  Period of cover: Expressed as periods of forecasted demand Users can override the values per period Inventory Planning
  28. 28. © 2016 Openbravo Inc. All Rights Reserved. 28 Computes purchase orders and distribution orders to fulfill the demand (Forecast + Customer orders + Safety stock) APS takes supplier constraints into consideration, such as: • Lead times • Priority among suppliers if multiple sourcing • Item cost • Minimum/multiple order quantity • Supplier capacity • Vacations Balances stock among warehouses automatically Distribution Planning
  29. 29. © 2016 Openbravo Inc. All Rights Reserved. 29 How APS Integrates with your ERP APS Distribution Planning (DRP) Demand management/Forecast Material requirement planning (MRP) Simulation - Optimisation ERP Sell Replenish Finance Control • Products • Warehouses • Suppliers • Unit cost • Distribution lanes • Logistic costs • Customer orders • On hand • On order Budget Budget Financial KPIs BI / Reporting Static data Dynamic data • Plans • Purchase orders • Distribution orders
  30. 30. © 2016 Openbravo Inc. All Rights Reserved. 30  An APS brings your planning process to a new level of maturity  Direct impact on business and faster ROI • Improved planner productivity • Reduced inventory • Increased cash flow • Improved delivery date accuracy • Agile response to market demand  An APS helps you taking long-term strategic decisions • Simulation capabilities (supplier management, facilities management…) FrePPLe Value Proposition
  31. 31. © 2016 Openbravo Inc. All Rights Reserved. 31 Key Takeaways  Customer demand is much less predictable in the omnichannel era  Cross-channel fulfillment complicates demand forecasting further  Bad planning causes out-of-stocks, overstocks, customer dissatisfaction and poor financial performance  Advanced planning software improves demand forecasting, inventory planning and distribution planning  The benefits include reduced inventory, improved fullfillment and shorter cash cycles  .
  32. 32. © 2016 Openbravo Inc. All Rights Reserved. 32 Any Questions? You can submit additional questions or comments after the webinar on Twitter. Hashtag: #webinar_OB #webinar_OB
  33. 33. © 2016 Openbravo Inc. All Rights Reserved. 33
  34. 34. © 2016 Openbravo Inc. All Rights Reserved. 34 Web: www.openbravo.com/contact Email: info@openbravo.com Spain Office: +34 932 725 947 France Office: +33 (0)1 70 08 73 62 India Office: +91 33 4004 7358 Mexico Office: +52 559171 1841 Thank you very much for your attention

×