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Demand Management - Food and Beverage


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Automated Demand Forecasting and Inventory Replenishment for Food & Beverage to Retail

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Demand Management - Food and Beverage

  1. 1. Restructuring Demand ManagementExecutive Presentation<br />For the Food and Beverage Industry<br />Steve Lewin<br />14 September 2009<br />
  2. 2. The Challenge<br />Demand Management is a critical component of the Supply Chain Management process.<br />Annual Business Planning<br />Long Range Procurement<br />Merchandising Planning<br />Account Management<br />Marketing Planning<br />Monthly RE<br />Planning Processes<br />Demand <br />Forecasting<br />Order Mgmt.<br />Supply Chain Management<br />Distribution Center Operations<br />Distribution Network Design<br />Customer Service <br />Inventory Mgmt.<br />Production Planning<br />Transportation Planning<br />Purchasing<br />Sound Demand Management is fundamental to business planning and the efficient operation of downstream supply chain processes, and central to achieving the objectives of lowest landed product cost and a high level of customer service.<br />
  3. 3. The Supply Chain is being viewed today as a series of interconnected business processes<br />Distribution Center Operations<br />Distribution Network Design<br />Inventory Mgmt./DRP<br />Production Planning/MPS<br />Order Mgmt.<br />Supply Chain Service Requirements<br />Demand <br />Forecasting<br />Transportation<br />Purchasing<br />Customer<br />Supplier<br />Supply Management<br />Sell Through Mgmt<br />Demand<br />Mgmt<br />Demand<br />Fulfillment<br />Establish Inventory<br />Plan and Select <br />Sources<br />Supplier<br />Customer<br />Sourcing<br />Create and Plan Customer Relationships<br />
  4. 4. Converging Forces Create New Business Problems<br />Competitive Forces<br />Best Practices<br />CUSTOMER<br />RETAILER<br />CONSUMER<br />DSD<br />SUPPLY CHAIN<br />PRIVATE LABEL<br />PRICING /PROMOTIONS<br />QR/VELOCITY<br />COST<br />NEW SERVICE OFFERINGS<br />CYCLE TIME<br />ECR<br />NEW VENDOR ALLIANCES<br />SERVICE<br />NON-STOP<br />CATEGORY EXCLUSIVITY<br />CONVENIENCE<br />TECHNOLOGY<br />GLOBAL EXPANSION<br />ECONOMIC GAIN<br />VMI/CR<br />NEW ITEM INTRO/PROMO<br />Elements of<br />Competition<br />xxxxx<br />5<br />
  5. 5. Functional Silos limit visibility to Supply Chain<br />Sales<br />Production<br />Channels<br />Food Service<br />International<br />Marketing<br />Micro<br />Macro<br />=<br />Direct Link<br />Limited<br />Technology Support<br />Operations/Logistics<br />Functional Organizations<br /><ul><li>No Integrated System
  6. 6. Various Excel/Lotus Spreadsheets
  7. 7. Fortune</li></li></ul><li>Migration Plan To Forecasting Excellence<br />= Current State<br />= Future State<br />Level 1 Level 2 Level 3<br />People<br />Processes<br />Technology<br />-<br />•Forecast accuracy is monitored and problem areas identified<br />•Forecast responsibility is better defined and is prepared centrally<br /><ul><li>Forecasting process receives input from major customers on a monthly or quarterly basis.
  8. 8. Single Forecast
  9. 9. Integrated statistical forecast based on historical sales</li></ul>•Remote access and update to forecast capability <br />•Forecast accuracy is not monitored <br />•Forecast responsibility is not well defined and is prepared Ad hoc<br /><ul><li>Forecasting process receives little or no input from stakeholders
  10. 10. Numerous nonintegrated Forecast
  11. 11. Statistical forecast non-integrated</li></ul>•Spreadsheet based monthly reporting of forecasts<br /><ul><li>Forecast accuracy monitored and input owners accountable for results</li></ul>Forecast responsibility is well defined and primarily the responsibility of the input owners<br /><ul><li>Forecasting process includes involvement from all stakeholders such as customers, distributors etc.</li></ul>•Integrated set of coordinated Forecasts<br /><ul><li>Integrated statistical forecast based on historical and predictive factors</li></ul>•Full “what if” planning<br />
  12. 12. Potential Future Vision - Demand Management Group<br />Executive<br />Marketing<br />Sales<br />Process<br />People<br />ABP<br />~<br />Micro<br />Macro<br />Discipline<br />Operations<br />Business Teams<br />Technology<br />Finance<br />MID<br />Output: Single Operational Forecast<br />
  13. 13. Forecast AccuracyMeasurement/Accountability<br />Higher Expected Forecast Accuracy<br />Sector Plan/Brand/Year<br />ABP<br />BU Plan/Brand/Quarter<br />Business Team <br />CDT Plan/Brand/Month<br />Increasing Organization/ Product/Period Detail<br />Regional/Market<br />Shipping Orbit/UPC/Week<br />Distribution Center<br />Customer Account/UPC/Day<br />SKU/Customer or Store<br />Lower Expected Forecast Accuracy<br />
  14. 14. Core Processes<br />Interfaces to Processes<br />Key Stakeholders<br />What’s Included<br />Macro Forecast<br />Core Processes<br />Interfaces to Processes<br />Key Stakeholders<br /><ul><li>Long-Term Capacity, Purchasing, and Logistics Planning
  15. 15. Sales Planning
  16. 16. Cost of Sales Projection
  17. 17. Financial Planning
  18. 18. Detailed Production Planning or Scheduling
  19. 19. Transportation Planning
  20. 20. Short-Term Purchasing
  21. 21. Financial Planning
  22. 22. Marketing
  23. 23. HQ Marketing
  24. 24. Business Teams
  25. 25. MID
  26. 26. HQ & Field Sales
  27. 27. Operations
  28. 28. Financial Planning
  29. 29. Operations
  30. 30. Production
  31. 31. Logistics
  32. 32. Purchasing
  33. 33. Field Sales
  34. 34. HQ Marketing</li></ul>Macro Forecasting Process, Tools/Systems Used, and Methodology<br />Micro Forecasting <br />Process, Tools/Systems Used, and Methodology<br />Finished Goods Requirements<br />Micro Forecast<br /><ul><li>Defining appropriate systems linkages & data requirements </li></li></ul><li>Goal: A Comprehensive Solution<br />Process<br />Challenge & Redefine<br />the Way We Do Work<br />Value to Enterprise<br /><ul><li>Project Success
  35. 35. Cost Reduction
  36. 36. Cycle Time Reduction
  37. 37. Risk Management
  38. 38. Builds For The Future
  39. 39. Competitive Advantage</li></ul>Fused Approach<br />People<br />Define Skills, <br />Organizations,<br />HR Practices, and Culture<br />Technology<br />Define Technology<br />Architecture & Applications <br />and Validate Use of<br /> Software<br />Aligns Process, People & Technology to Meet Business Objectives<br />
  40. 40. Phase I <br />Phase II <br />Phase III <br />Phase IV <br />Overall Project Approach<br /><ul><li>Leading Practices
  41. 41. Business Case
  42. 42. Proof-of-Concept</li></ul>Define<br />Design<br />Develop<br />Deploy<br /><ul><li> People
  43. 43. Process
  44. 44. Technology
  45. 45. Business Case
  46. 46. Pilot
  47. 47. Process
  48. 48. Technology
  49. 49. People
  50. 50. Application Tests
  51. 51. Training
  52. 52. Business Case
  53. 53. Communication
  54. 54. Installation
  55. 55. Value Achieved</li></ul>6-8 Weeks<br />2-4 Months<br />2-4 Months<br />2-4 Months<br />Build<br />Install<br />
  56. 56. Phase I Deliverables<br />
  57. 57. Critical Success Factors<br /><ul><li>Strong Sponsorship
  58. 58. Clear Objectives
  59. 59. Sustained Commitment
  60. 60. Right Team
  61. 61. Change Management Strategy
  62. 62. Well-defined Process Boundaries
  63. 63. Industry Knowledge
  64. 64. Proper Technology
  65. 65. Consensus That Business Problem is Solvable</li></li></ul><li>Phase I-Future State DefinitionProject Fees and Timing<br />6-8 Weeks<br />Elapsed Time<br />Project is a Priority to the Organization<br />Issue Resolution and Direction will be Prompt<br />Key Assumptions<br />Estimate for Professional Services $300,000<br />Plus Out-of-Pocket Expenses (primarily travel)<br />Fees<br />
  66. 66. Project Organization<br />Executive Sponsors<br />Steering Committee<br /><ul><li>Executive Sponsors
  67. 67. Marketing/Business Teams
  68. 68. Operations
  69. 69. Sales
  70. 70. Finance & Systems
  71. 71. Manufacturing
  72. 72. Partner Executives</li></ul>Engagement Directors<br /><ul><li>Client
  73. 73. Partner</li></ul>Partner Quality Assurance<br />Project Management<br /><ul><li>Client
  74. 74. Partner</li></ul>Subject Matter Specialists<br />Org. Alignment Team<br />Change Management Team<br />Process Redesign Team<br />Systems Integration Team<br />
  75. 75. Partner Value-add<br />50,000 Foot View<br /><ul><li>We provide successful, comprehensive (people, process, and technology) solutions that leverage our knowledge of best practices and our broad industry experience</li></ul>10,000 Foot View<br /><ul><li>We have significant consumer goods manufacturing experience and supply chain expertise to add value across your entire enterprise</li></ul>Ground Level View<br /><ul><li>We have invested substantially in our audit and consulting relationships with client enterprise, and will continue to dedicate our high quality resources to this relationship</li></li></ul><li>5<br />12<br />19<br />26<br />4<br />11<br />18<br />25<br />1<br />8<br />15<br />22<br />29<br />Project Plan Phase I -Future State Definition<br />Month 1<br />Month 2<br />Month 3<br />Initiate Project<br />Current State<br />Future Vision<br />Init Future Design<br />Refine Bus Case<br />Design Workplan<br />Assess. / Review<br />
  76. 76. Rolling Estimate Sub-Processes<br />