MEETING THE DEMANDS OF AN ON DEMAND WORLD

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MEETING THE DEMANDS OF AN ON DEMAND WORLD
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Collaborative Business Management

DEMAND MANAGEMENT
INTEGRATION
SOP
CRM
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Why 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

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Demand Management At Work
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Demand 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

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Demand 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

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Demand 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

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True Competency In Demand Management Comes From

• Management desire
• Human judgment and intervention
• Excellence in business processes
• Educated workforce organized for success
• Excellence in execution

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Demand Management

• Companies must change from functional silos
  within the organization to a more open concept of
  information flow and sharing.

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Demand 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.

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The 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.

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Ineffective 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)

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Danger In Collaborating On Forward Looking Plans

• Lack of vision to the true state of reality
• Different compensation programs
• New product introduction
• Optimistic management goals

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Demand 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

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Who Needs To Be Involved In The Demand Planning
Process?

• SALES
• MARKETING
• PRODUCT LINE MANAGERS
• MASTER SCHEDULING
• PURCHASING
• MANUFACTURING
• FINANCE

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• Companies need to create accountability in all
  areas for the creation and maintenance of the
  Demand Plan

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• Communications is the single most important
  factor in excellent Demand Management

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Why 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

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Demand 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

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Demand 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

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Demand 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

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Sales 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

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Sales 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.

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Deliverables 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

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The 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.

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Long-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.

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Everyone 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.

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Organizational 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.

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World 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.

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Survival

• 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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