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Christopher４Matching supply and demand (４ Forecast for capacity, execute…
Christopher４Matching supply
and demand
４ Forecast for capacity, execute against demand
Situation
Uncertainty /Hard to forecast demand at the stock keeping unit (SKU) level
Solution:
Forecast-driven to Demand-driven
‘generic’ inventory
forecasting is not at individual item level
but aggregate volume
Zara/
forecast for resources& materials,
not final garment.
３ The supply chain fulcrum
Fulcrum 支點
What is it
1 the point we commit to source/produce/ship the product in its final form and where decisions on volume and mix are made
2 Between D(Demand) &
C(capacity)+ I(Inventory)
Means the goal of SCM should
be enough capacity and/or inventory to meet anticipated demand.
‘capacity’ refers to the ability to access supply not currently
held as inventory
Goal
move point delayed to close demand
make to-order
Way
1 improve the visibility of demand
2 enhancing the velocity of supply chain
５ Demand management and planning
Proper nouns
Demand planning
the translation of our understanding of what the real requirement of the market is into a fulfilment programme
Demand management
to describe the various tools and procedures that enable a more effective balancing of supply and demand to be achieved through a deeper understanding of the causes of demand volatility.
S&OP
sales and operations planning
ensure that the organisation is able to anticipate the real
requirement of the market and to react in the most cost-effective way
ensure the highest level of customer satisfaction through on-time, in-full deliveries with minimum inventory.
S &OP process
1 Generate aggregate demand forecast
Forecasting on the basis of high-level aggregate volume is easier
Global demand >> individual customers
2 Modify the forecast with demand intelligence
1 The past statistical data (from stage1)
should be modified to match the current market
2 Key customers/supplier should be involved in Stage2
for wider array of intelligence
4 Create a ‘rough cut’ capacity plan
a ‘rough cut’ capacity plan
(a resource plan)
Check if there are enough capacity
for "consensus forrecast"
3 Create a consensus forecast
Use a cross-functional approach to
make a seamless alignment
Between Demand creation & fullfilment
Demand creation (i.e. sales and marketing)
-----present modified forecast
Demand fulfillment(i.e. logistics and operations)
-----detail any constraints
5 Execute at SKU levels against demand
How to achieve real demand?
Chapter 5
Sharing more information among parties in the supply chain
6 Measure S&OP performance
SHORT term
1 The percentage of perfect order achievement
2 Number of days of inventory
3 The amount of capacity needed
LONG term
Reduce the dependency on the forecast
1 Measure lead-time gap at the individual item level by focusing on t
ime compression
and
improved visibility.
２ Improving the visibility of demand
Receive earlier
warning of requirements.
1 demand penetration points
(decoupling point) are too far
WHERE
real demand meets the plan.
GOAL：push demand penetration point to upstream
better schedule logistics activities
better customer service at lower cost.
Decoupling point is the strategic stock that separates the demand side of the supply chain (focused on delivery to the end customer) from the supply side ( based on logistics planning).
2 we can only see orders
real demand is hidden
an on-going feed-forward of information
on demand or usage can be established
１ The lead-time gap
Forecast.
"carrying inventory"
conventional way
bridge the gap between
the logistics lead time
and the customer’s order cycle
improving forecast accuracy
not in investing ever greater
rather in reducing the lead-time gap
1 shortening the logistics lead time
2 improved visibility of demand
６ Collaborative planning, forecasting and replenishment
1
(CPFR)
Collaborative planning, forecasting and replenishment
(1) managing the buyer/supplier interfaces
across the supply chain
2
From
VMI
vendor managed inventory
Manage the flow of product through supplier
instead of customers
no customer orders
instead supplier makes decisions on quantities
which data from the point-of-use or
the point-of-sale or customer’s distribution centre
‘substituting information for inventory’
conventional
replenishment systems
carry safety stock
(2) A joint forecast agreed and signed off by both the supplier and customer.
