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Supply Chain Planning Demand Planning Excellence – Automotive Industry Supply Chain Planning Demand Planning Excellence – Automotive Industry

Supply Chain Planning Demand Planning Excellence – Automotive Industry - PowerPoint Presentation

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Uploaded On 2018-12-19

Supply Chain Planning Demand Planning Excellence – Automotive Industry - PPT Presentation

May 2013 More than 10000 items to review on a monthly andor weekly rolling planning horizon Volatile and complex planning environment Difficulty to hire and retain skilled specialists in supply chain or operations management ID: 744059

process planning forecasts demand planning process demand forecasts supply items manage forecast chain centralized automation seasonal system increase time

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Slide1

Supply Chain PlanningDemand Planning Excellence – Automotive Industry

May 2013Slide2

More than 10,000 items to review on a monthly and/or weekly rolling planning horizonVolatile and complex planning environmentDifficulty to hire and retain skilled specialists in supply chain or operations managementOften only one resource to manage the total puzzle

IT systems not connected and not integrated

Functions are not connected, centralized or integratedFew or limited resources to invest on advanced IT systemsERP system lack of functionalities to support decision making processExtensive usage of Excel spreadsheetsLack of operational performance measures (KPIs)Limited business intelligence capabilities

Planning Complexity for a Typical Mid-Market Company

2

Demand Planning Process ExampleSlide3

Automotive Industry

3

Industry : manufacturer and distributor of automotive parts (OEM and aftermarket)

Number of active items (skus

) 

8000

Required service level (fill rate) : >= 96 %

17 warehouses located

in North America (Canada and USA)3 manufacturing plants located in CanadaUsage of domestic and offshore sources (Asia)15 major national client accountsLead times require accurate 3-month forecast

Demand Planning Process Example

AsiaSlide4

Business Objectives : « Aftermarket » distribution channelIncrease forecast accuracies (1, 2 and 3 periods ahead (months))

Decrease inventory of finished goods in the network

Maintain and increase customer serviceReduce planning complexityBusiness Objectives

4

Demand Planning Process ExampleSlide5

Modules Deployed 5

Demand Planning Process ExampleSlide6

Required Planning Technology Enablers6

Usage and enablement of all of these features

The key is to integrate all the information into the same planning workspace (screen)

Planner shall see, by default, only the important elements on which he should focus on

Planner should have drill down capability to see components that create or influence the value’s behavior

Reaction time between the change of an input and the visualization of its impacts on a set of outputs should tend to be “real time“

Demand Planning Process ExampleSlide7

Usage of diverse non standard Excel spreadsheets to build forecasts

Manual and labor intensive planning process

Each business unit had the responsibility to supply its sales forecasts

A team at headquarter had the responsibility of consolidating and formatting forecasts from all business units

Long response time (long planning cycle) and heavy usage of human resourcesPlanning Environment Prior to the Implementation of

nSkep Demand Planning

7

Product Line i

…Product Line NBuild and manage forecasts

Excel files (non standard)

Consolidate files

Use forecasts

Procurement

Production

Finances – Budget tracking

2

2

3

Demand Planning Process ExampleSlide8

The Vision8

Control tower

Collaborate

Control

Plan

Execute

Measure

Clients

Distribution

a

nd transportation

Suppliers +

Supply Chain

One planning tool

Integrated with the transactional systems

With BI capabilities

Configurable and flexible

Manufacturing plants

Demand Planning Process ExampleSlide9

Implementation Phases9

Phase 1

Phase 2

Centralization

and standardization

Optimization and Simplification

Demand Planning Process ExampleSlide10

Centralized Demand

P

lanning Function10

Centralized Function

Step 1 Improvements

1

2

5

#Number of resources involved in the process

Statistical forecasts – automated process

Segmentation of the process by product line and by ABC classes

Measure and track forecast accuracies Consolidation of data flows and planning processes on a centralized platform Stabilize data flowsReduce number of participants

Better visibility

Demand Planning Process ExampleSlide11

Centralized Demand

P

lanning Function11

Centralized Function

Step 1 Challenges

A large quantity of information to review

Difficulty to trust the system (change management challenge)

Wrong interpretation of the outputs

Improper or weak understanding of statistical models and how they manipulate information Long time required to review all forecasts Difficulty to properly interpret risks Bias caused by human factorsDemand Planning Process ExampleSlide12

Manage by Exception

Automation and Optimization12

Segmentation of the Complexity and

P

rocesses

Strong Positive Trend

Strong Negative TrendStable Trend

Risks - Variability

Sort by importance

Alerts

Demand Planning Process Example

Reviews achieved by the planner

3 130 items (40 %) to review

Automated

r

eviews by the system

4 717 items (60 %) reviewed by the system

Seasonal

New

Discrete

Non SeasonalSlide13

Manage by Exception

Automation and Optimization13

Segmentation of the Complexity and

P

rocesses – Second Level of Segmentation

Sales Forecasts

Reviews achieved by the planner

Automated reviews by the system

1845 items (23.50 %)

6002 items (76.50 %)

Demand Planning Process ExampleSlide14

Manage by Exception

Automation and Optimization

14

Manage by Exception - Automation and Optimization

Step 2 Improvements

Reduce by 76% the number of items reviewed on a monthly basis

Increase the users’ trust with the planning system

Help focus on the most important elements Reduce complexity Quickly identify problems and suspicious behaviors Reduce planning cycle time

Demand Planning Process Example

Seasonal

New

Discrete

Non SeasonalSlide15

Manage by Exception

Automation and Optimization15

Manage by

E

xception - Automation and Optimization

Step 2 Challenges

Difficulty to reconcile operational forecasts with financial trends

Gaps between the two forecast flowsDemand Planning Process Example

Seasonal

New

Discrete

Non SeasonalSlide16

Internal Collaboration

16

Sales +

Supply

Chain + Finances (Complete

Internal

Collaboration)

Flex

Budgetconsensus

« 

bottom

-up & top-down »

Supply

Chain

Finances

Sales and

Supply

Chain

Demand Planning Process Example

Production &

ProcurementSlide17

Internal Collaboration

17

Sales + Supply Chain + Finances (Complete Internal Collaboration)

Step 3 Improvements

Alignment of operational forecasts and financial trends

Better forecast at the Item-Hub levels and at the Item-DC levels

Coherent communication of the demand plan to all actors within the company (one version of the truth)

Demand Planning Process ExampleSlide18

Demand Planning Process ExampleBusiness Objectives : « Aftermarket » distribution channel

Increase forecast accuracies (1, 2 and

3 periods ahead (months))Increase forecast accuracies by more than 5 pointsDecrease finished good inventory in the overall networkFor only ten items, inventory value reduced by more than $50,000Maintain and increase customer service

Reduce planning complexityCentralized demand planning functionStandardized processes

Reduced number of actorsReduced planning cycle time

Tangible Benefits

18Slide19

Key Takeaways19

Demand Planning Process ExampleSlide20

Thank You!20