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Collaborative demand & supply planning - strategic inventory management for discrete manufacturers


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Find out how SAP and partner solutions can help consumer products manufacturers respond to volatility across their supply chains and value networks. Learn how collaborative demand and supply planning enables you to develop winning strategies and tactics and respond to market changes quickly and cost-effectively.

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Collaborative demand & supply planning - strategic inventory management for discrete manufacturers

  1. 1. SAP Solution Brief Responsive Supply Networks COLLABORATIVE DEMAND AND SUPPLY PLANNING HELP CONSUMER PRODUCTS COMPANIES SYNCHRONIZE SUPPLY TO DEMAND Collaborative demand and supply planning allows con- sumer products companies to develop winning strate- gies and tactics across the supply network. SAP® soft- Globalization is proving to be both a digest data from many different sources. blessing and a curse for consumer prod- Whether it’s point of sale data from ware helps your company ucts (CP) companies. With access to retailers, actual orders from customers, improve visibility and control new regions, consumers, and suppliers, promotional plans from marketing, or CP manufacturers enjoy an expanding forecasts from your sales team, you throughout the supply net- world of selling and sourcing opportuni- must harmonize and consolidate these work, so you can respond to ties. But with this expansion comes com- data streams to get a clear picture of plexity. Retailers demand shorter inter- demand. Armed with an accurate pro- market changes quickly and vals, favorable prices, and high product jection of what the market will bear, you cost-effectively. availability. Consumers want to find items are better equipped to manage planning on the shelf. And, with components and processes, synchronize supply activities, raw materials being furnished via a com- and mitigate supply risks. plex web spread over many locations and time zones, there are more places SAP® software supports a full spectrum than ever for things to go wrong. of demand management processes. With applications that integrate and synthesize This double-sided dilemma makes it demand creation initiatives, internal and extremely difficult to put the right products external forecasts, customer demands, on the right shelves at the right time – and consumer buying trends, you can and at the right level of profitability. To blend multiple sources of information to overcome these challenges you need to increase demand accuracy and improve balance demand and supply within your your responsiveness to ever-shifting own supply chain as well as partner with consumer buying patterns. As you move suppliers and customers and establish from a forecast-driven to a demand-driven new levels of collaboration across func- approach, your company can lower tional and departmental boundaries. SAP safety stocks and inventory, streamline can help – with solutions that help you production runs, and cut distribution proactively manage your internal as well costs – all while maintaining or even as extended supply network, enabling improving delivery service targets. you to track fluctuations in demand, respond to supplier delivery volatility, Respond Faster and Smarter with and recover from operational disruptions. Integrated Supply Planning Improve Visibility Through Inefficient or short-sighted supply plan- Collaborative Demand ning can result in poor resource utiliza- Management tion, excess inventory, high supply chain costs, and dissatisfied customers. With Forecasting, the traditional gauge of mar- uncertainty at all levels of the demand/ ket demand, has been viewed as half art supply continuum, CP companies must and half science, and almost always does expand supply planning activities across not predict demand as accurately as the supply network rather than relying on needed. To get a more comprehensive a top-down, centrally managed approach. view of demand, you have to collect and With distributed supply planning that
  2. 2. links all partners, facilities, and func- The plans developed in each of these tionalities, your company can establish departments may be independently valid optimum safety-stock levels and syn- but out of sync with each other or with chronize delivery schedules for both broader corporate goals. To ensure a finished products and materials. balance between demand and supply, these diverse plans need to be aligned SAP solutions help you improve supply through cross-departmental collabora- planning by integrating purchasing, tion. S&OP processes should be part manufacturing, distribution, and trans- of a consolidated plan that accommo- portation plans into a comprehensive dates your company’s financial goals, supply planning approach. With applica- marketing efforts, and inventory targets. tions that enhance key processes such as safety-stock planning, supply net- work planning, distribution planning, To profitably fulfill demand, procurement, and materials manage- consumer products compa- ment, you can manage end-to-end sup- ply chain processes with optimal agility nies need to extend their your supply network, you can allocate and visibility. Your company can make supply strategy across the resources to meet strategic or tactical more informed decisions about quanti- goals, create or alter a promotional plan, ties to be produced and delivered to network, establish optimum adjust inventory positions, leverage appropriate locations, matching cus- safety-stock levels, and syn- capacity at a contract manufacturer, tomer demand and maintaining targeted or fine-tune production runs. service levels. chronize delivery schedules for both finished products Solutions to Enable Collaborative Balance Demand and Supply with Demand and Supply Planning Sales and Operations Planning and materials. SAP and partner solutions enable CP Many CP manufacturers face challenges SAP software helps you collaborate companies to build collaborative demand when responding to disruptions on both across departmental and enterprise and supply planning processes that con- the demand and supply side of the value boundaries to balance demand and tinuously sense demand fluctuations, chain. If you manage sales and opera- supply over a distributed network. This supplier delivery volatility, and opera- tions planning (S&OP) with disparate enables your company to fine-tune op- tional disruptions. Supported business procedures, systems, data sources, and erations and inventory so you can seize processes include: network partners, you may not learn market opportunities and mitigate sup- about exceptions quickly enough to ply risks. When all relevant data, pro- Collaborative Demand Management respond effectively. Without optimized cesses, and applications are integrated, • Demand signal capture capacity and inventory, your company you have better visibility, intelligence, Improve forecast accuracy and reduce becomes vulnerable to inflated supply and control across the extended enter- stock outs with the Vision Chain chain costs and poor in-stock rates. prise. As you enhance S&OP with rele- Demand Signal Adapter solution. vant information from distribution, sup- Certified integration with the SAP Another problem for CP manufacturers ply, purchasing, and marketing units, NetWeaver® technology platform is the differing views found in functional your company becomes more agile, allows the solution to deliver cleansed areas such as supply chain management, more responsive, and more profitable. and harmonized demand signals from purchasing, production, and budgeting. Armed with real-time data from across retailers.
  3. 3. • Sales forecast collaboration and then apply these levels across SAP software enables Improve productivity and enhance the entire supply network to reduce decision making with Duet™ software. inventory costs end-to-end supply plan- Leverage demand planning in the SAP ning across distribution, Supply Chain Management application • Supply network planning through a Microsoft Excel user inter- Increase visibility across the overall manufacturing, procure- face. Information workers across the supply chain by integrating purchas- ment, and partner orga- supply network can contribute to ing, manufacturing, distribution, and planning efforts without having to transportation plans into an overall nizations for faster and master unfamiliar applications. supply picture. Simulate different smarter responsiveness market conditions and implement • Demand planning and forecasting sourcing decisions based on a single, at the lowest possible Leverage state-of the-art forecasting globally-consistent model. cost. algorithms to anticipate demand for products while supporting close • Multiechelon inventory optimization collaboration with your customers Reduce inventory costs with the to exchange and enhance demand SmartOps Multistage Inventory • Distribution planning data. Improve forecast quality with Planning & Optimization solution, Determine which demands can be a consolidated demand plan across an SAP-endorsed business solution fulfilled using existing resources and regions, companies, and departments. that helps you calculate how much calculate optimal strategies for allo- of each item you should carry – why, cating supply and replenishing stock- • Vendor-managed inventory and where, and when ing locations responsive replenishment Improve inventory replenishment and • Rough-cut production planning Sales and Operations Planning collaboration through state-of-the art Improve medium- to short-term plan- • Cross-company and departmental vendor-managed inventory functional- ning to maximize the product mix per data analysis ity. SAP applications enable true time period and determine the amount Transform information into insight demand-driven replenishment based of capacity to be used with business intelligence software on forecasting, replenishment planning, from SAP and Business Objects, an and truckload building with or without • Procurement planning SAP company. With a comprehensive promotion management. Leverage the results of rough-cut set of tools, planning and simulation production planning to optimize the functionality, and a data warehouse, • Trade promotion planning procurement of direct materials, con- you can make sound decisions and Increase sales and solidify retailer solidate purchasing activities, and take targeted actions. relationships with integrated head- determine volumes for mid- to long- quarters and field planning, customer term contracts with suppliers • Demand and supply planning sell-in and negotiation, execution, Optimize operating margins by validation, and evaluation of trade • Supplier collaboration balancing global demand and supply promotions Collaborate with suppliers and sub- across enterprise functions and net- contractors to enable collaborative work participants, while establishing Supply Planning planning with direct interaction and the right resources to fulfill demand • Safety-stock planning data exchange profitably. Determine the optimal levels of safety stock to satisfy unexpected demand,
  4. 4. QUICK FACTS /contactsap Summary Effective supply network management depends on synchronizing and balancing ever- changing demand and supply dynamics. SAP® software helps consumer products manu- facturers gain the visibility and collaboration they need to meet customer expectations and optimize profits. Challenges • Serve more customers in more markets • Manage growing product and network complexity • Reduce inventories, lead times, stock outs, and supply chain costs • Improve efficiency and agility so the right product is on the right shelf at the right time Supported Business Processes and Software Functions • Collaborative demand management – Integrate all relevant demand processes and data sources across functional and enterprise boundaries • Supply planning – Integrate distribution, production, and inventory planning to improve your responsiveness to missed deliveries, product shortages, and other disruptions in the supply network • Sales and operations planning – Create a more profitable comprehensive plan by blending information across functional and organizational boundaries while providing a flexible tool set for preparing and executing sales and operations planning initiatives Business Benefits • Seize revenue opportunities, eliminate stock outs, and provide a better shopper experience by gaining better visibility into customer and consumer demand • Improve in-stock rates and service levels, optimize network inventories, and reduce supply chain costs by responding quickly and profitably across the supply network • Profitably meet customer expectations and be a better partner for growth by out-executing your competition and balancing demand and supply For More Information To learn more how SAP solutions support collaborative demand and supply planning, contact your SAP representative or visit us on the Web at 50 091 327 (08/10) ©2008 by SAP AG. All rights reserved. SAP, R/3, xApps, xApp, SAP NetWeaver, Duet, PartnerEdge, ByDesign, SAP Business ByDesign, and other SAP products and services mentioned herein as well as their respec- tive logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world. Business Objects and the Business Objects logo, BusinessObjects, Crystal Reports, Crystal Decisions, Web Intelligence, Xcelsius, and other Business Objects products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of Business Objects S.A. in the United States and in several other countries. Business Objects is an SAP Company. All other product and service names mentioned are the trademarks of their respective companies. Data contained in this document serves informational purposes only. National product specifications may vary. These materials are subject to change without notice. These materials are provided by SAP AG and its affiliated companies (“SAP Group”) for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty.