chevron process 1 © the delos partnership 2005 sales forecasting and demand management the process
TRANSCRIPT
Chevron process 1 © The Delos Partnership 2005
Sales Forecasting and Demand Sales Forecasting and Demand ManagementManagement
The process
Chevron process 2 © The Delos Partnership 2005
Forecasting Needs a Forecasting Needs a Simple ProcessSimple Process
Analyze History
Execute Forecast
CaptureHistory
C O N S E N S U S C O N S E N S U S F O R E C A S TF O R E C A S T
Review Commercial Plans
Review ExceptionalDemand
Hold Demand Review
Assumptions written down and agreed
Chevron process 3 © The Delos Partnership 2005
1. Capture Actual1. Capture Actual
• Each month we capture Actual History
• Captured from Order Entry Software - shipments
Chevron process 4 © The Delos Partnership 2005
Forecasting Needs a Forecasting Needs a Simple ProcessSimple Process
FilterDemand
Execute Forecast
CaptureActual
C O N S E N S U S C O N S E N S U S F O R E C A S TF O R E C A S T
Review Commercial Plans
Review ExceptionalDemand
Hold Demand Review
Assumptions written down and agreed
Chevron process 5 © The Delos Partnership 2005
2. Review Actual Demand2. Review Actual Demand
Look for unusual shipment, not going to be repeated
Competitor going out of business Unusual promotions Millennium bug Mistake
Beware spike caused by stock outsAug 5035Sept 6040Oct 237 StockoutNov 5750
Chevron process 6 © The Delos Partnership 2005
Forecasting Needs a Forecasting Needs a Simple ProcessSimple Process
FilterDemand
Execute Forecast
CaptureActual
C O N S E N S U S C O N S E N S U S F O R E C A S TF O R E C A S T
Review Commercial Plans
Review ExceptionalDemand
Hold Demand Review
Assumptions written down and agreed
Chevron process 7 © The Delos Partnership 2005
3. Execute Statistical 3. Execute Statistical ForecastForecast• Forecast should use history to produce
trends and identify patterns
• Key influences to be detected :– Base– Trend– Seasonality
Chevron process 8 © The Delos Partnership 2005
Forecasting Needs a Forecasting Needs a Simple ProcessSimple Process
FilterDemand
Execute Forecast
CaptureActual
C O N S E N S U S C O N S E N S U S F O R E C A S TF O R E C A S T
Review Commercial Plans
Review ExceptionalDemand
Hold Demand Review
Assumptions written down and agreed
Chevron process 9 © The Delos Partnership 2005
Sales Forecasting: InputsSales Forecasting: Inputs
• New Customers• New Products• Pricing Initiatives• Advertising And Promotions• Cannibalisation• Customers Own Forecast• Competitors Activity• External Factors
Chevron process 10 © The Delos Partnership 2005
Sales Forecasting: InputsSales Forecasting: Inputs
• New Customers• New Products• Pricing Initiatives• Advertising And Promotions• Cannibalisation• Customers Own Forecast• Competitors Activity• External Factors
MarketingPlans
Chevron process 11 © The Delos Partnership 2005
Forecast must be Forecast must be supported by Assumptionssupported by Assumptions
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
1254 145 145 156 156 170 170 135 135 135 145 160 160
1345 145 167 135 180 200 200 200 200 150 150 150 200
1256 100 200 200 200 200 200 300 300 200 200 200 200
1347 50 50 50 50 40 40 30 30 20 20 40 50
NUMBERS !
ASSUMPTIONS
Chevron process 12 © The Delos Partnership 2005
Management of InnovationManagement of Innovation
Stage/Gate Process
Formal Process for Managing Project
Gate0
Gate0
Gate1
Gate1
Gate2
Gate2
Gate3
Gate3
Gate4
Gate4
Stage 0 Stage 1 Stage 2 Stage 3 Stage 4
Review
Investigate FinancialCase
Develop Test Launch
Forecast Entered intoSystem to drive MRP Mimics
Forecast Reviewed hereFor accuracy
Chevron process 13 © The Delos Partnership 2005
0
50
100
150
200
250
300
350
400
450
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Forecast
New Product With Pipeline New Product With Pipeline Fill ForecastFill Forecast
Chevron process 14 © The Delos Partnership 2005
Demand Creation & Sales Demand Creation & Sales PlanningPlanning
ADVERTISING AND PROMOTIONS
The planning of the promotioncan be precise
The impact of the promotionis imprecise
Assumptions need to be recorded Assumptions need to be recorded
Chevron process 15 © The Delos Partnership 2005
Promotional Curve Promotional Curve AnalysisAnalysis
Effect of Promotion
-40
-20
0
20
40
60
80
100
120
140
1 2 3 4 5 6 7
Month
Unit V
olu
me
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
Ind
ex
Hist
Prom
Curve
Chevron process 16 © The Delos Partnership 2005
Get Input From Customer’s Get Input From Customer’s PlansPlans• Will require understanding of Customers
Plans
• Needs effective Sales Planning Process
• May be linked into Customer Replenishment Planning Process
Chevron process 17 © The Delos Partnership 2005
Forecasting Needs a Forecasting Needs a Simple ProcessSimple Process
FilterDemand
Execute Forecast
CaptureActual
C O N S E N S U S C O N S E N S U S F O R E C A S TF O R E C A S T
Review Commercial Plans
Review ExceptionalDemand
Hold Demand Review
Assumptions written down and agreed
Chevron process 18 © The Delos Partnership 2005
Pre-Planned Epidemic Pre-Planned Epidemic ForecastForecast
2 Forecasts Maintained
0
50
100
150
200
250
1 2 3 4 5 6 7 8 9
Month
Volu
me
'Epidemic'
Normal
Chevron process 19 © The Delos Partnership 2005
Sales Forecasting Review Sales Forecasting Review Exceptional DemandExceptional DemandReview large potential business
- Large New Customers- Big new market– New products– Large one time demand
Decide whether to include in forecast or not– Avoid probabilities– Decide on hedging strategy– Agree on acceptance of risk
Chevron process 20 © The Delos Partnership 2005
Forecasting Needs a Forecasting Needs a Simple ProcessSimple Process
FilterDemand
Execute Forecast
CaptureActual
C O N S E N S U S C O N S E N S U S F O R E C A S TF O R E C A S T
Review Commercial Plans
Review ExceptionalDemand
Hold Demand Review
Assumptions written down and agreed
Chevron process 21 © The Delos Partnership 2005
Hold Demand Review Hold Demand Review MeetingMeeting
1. Review changes2. Agree assumptions and
changes3. Review products4. Review customers5. Review NPD activities6. Review KPI’s7. Sign off the forecast
Chevron process 22 © The Delos Partnership 2005
Demand PlannerDemand Planner
Strategy
Customer RelationshipManager
Sales and Marketing
SystemForecast
Plan
ManufacturingAnd Purchasing
ERPSystem
Consensus ForecastConsensus Forecast
Chevron process 23 © The Delos Partnership 2005
Typical Role of Demand Typical Role of Demand PlannerPlanner• Co-ordinates External Plan• Responsible for Demand Plan• Review the all of the numbers• Challenge not changes the External Plan• Work with Availability Planner• Works with Sales and Marketing• Influences Customer Service levels• Inputs on Safety Stock policies• Facilitates decision on customer allocation• Manages the Sales Planning system • Manages the Sales Planning process• Enforces good behaviours