Supply Chain Planning PowerPoint Presentation, PPT

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Demand Planning Excellence – Automotive Industry. May 2013. More than 10,000 items to review on a monthly and/or weekly rolling planning horizon. Volatile and complex planning environment. Difficulty to hire and retain skilled specialists in supply chain or operations management. ID: 568843

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Supply Chain Planning

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Supply Chain PlanningDemand Planning Excellence – Automotive Industry
May 2013
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 puzzleIT systems not connected and not integratedFunctions 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 Example
Automotive Industry
3
Industry : manufacturer and distributor of automotive parts (OEM and aftermarket)Number of active items (skus)  8000Required 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
Asia
Business Objectives : « Aftermarket » distribution channelIncrease forecast accuracies (1, 2 and 3 periods ahead (months))Decrease inventory of finished goods in the networkMaintain and increase customer serviceReduce planning complexity
Business Objectives
4
Demand Planning Process Example
Modules Deployed
5
Demand Planning Process Example
Required Planning Technology Enablers
6
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 Example
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 forecastsA team at headquarter had the responsibility of consolidating and formatting forecasts from all business unitsLong response time (long planning cycle) and heavy usage of human resources
Planning Environment Prior to the Implementation of nSkep Demand Planning
7
Product Line i
…
Product Line N
Build and manage forecasts
Excel files (non standard)
Consolidate files
Use forecasts
Procurement
Production
Finances – Budget tracking
2
2
3
Demand Planning Process Example
The Vision
8
Control tower
Collaborate
ControlPlanExecuteMeasure
Clients
Distributionand transportation
Suppliers +
Supply Chain
One planning toolIntegrated with the transactional systemsWith BI capabilitiesConfigurable and flexible
Manufacturing plants
Demand Planning Process Example
Implementation Phases
9
Phase 1
Phase 2
Centralization
and standardization
Optimization and Simplification
Demand Planning Process Example
0
Centralized Demand
Planning Function
10
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 Example
1
Centralized Demand
Planning Function
11
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 factors
Demand Planning Process Example
2
Manage by Exception
 Automation and Optimization
12
Segmentation of the Complexity and Processes
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 Seasonal
3
Manage by Exception
 Automation and Optimization
13
Segmentation of the Complexity and Processes – Second Level of Segmentation
Sales Forecasts
Reviews achieved by the planner
Automated
r
eviews by the system
1845 items (23.50 %)
6002 items (76.50 %)
Demand Planning Process Example
4
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 systemHelp 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 Seasonal
5
Manage by Exception
 Automation and Optimization
15
Manage by Exception - Automation and Optimization
Step 2 Challenges
Difficulty to reconcile operational forecasts with financial trends
Gaps between the two forecast flows
Demand Planning Process Example
Seasonal
New
Discrete
Non Seasonal
6
Internal Collaboration
16
Sales +
Supply Chain + Finances (Complete Internal Collaboration)
Flex
Budget
consensus
«
bottom
-up & top-down »
Supply
Chain
Finances
Sales and
Supply
Chain
Demand Planning Process Example
Production &
Procurement
7
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 Example
8
Demand Planning Process Example
Business Objectives : « Aftermarket » distribution channelIncrease 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 serviceReduce planning complexityCentralized demand planning functionStandardized processesReduced number of actorsReduced planning cycle time
Tangible Benefits
18
9
Key Takeaways
19
Demand Planning Process Example
0
Thank You!
20