Demand Planning for Inventory and Capacity Utilization

8th Express, Logistics and Supply Chain Conclave

My friend want to say something“The more Inventory we have the better we can respond on

our customers ”

“We offer our clients 100 % availability of products at any

time and place, irregardless the costs(Which we don’t know)”

My friend want to say something

“We do not have a clue what our customers demand in the future”

The quantities of products we produce depends on maximum usage of our

manufacturing Capacity

Top Supply Chain Management Areas targeted for Improvement in 2014

Supply Chain Visibility Supply Chain Collaboration Sourcing/Procurement0%

10%

20%

30%

40%

50%

60%

70%63% 63%

53%

41%

51%

43%45%

36%

43%

Best in Class Industry Average Laggards

Data Source : Aberdeen Group, November 2013

Effective Demand Planning

Sourcing/ Procurement

Supply chain Collaboration

Supply chain Visibility

Demand Planning

Demand Planning Major steps of Checklist

1.Get the Right Information

2.React Faster

3.Bridge the Divide

4.Understand the Impact

Get the Right Information Create and Manage Forecast

• Create and manage forecasts at, or as close as possible to, individual stock-keeping units (SKUs).

Create a consensus forecast. • Ensure that you capture and consolidate forecast input from all the

necessary disparate sources Establish supply chain visibility into your multi-

enterprise, multi-tier supply chain.

React Faster Update forecasts more frequently.

• In an environment of high variability, traditional monthly planning cycles do little to provide accurate direction from a daily perspective.

• A reconciliation of supply and demand plans needs to be done on a more frequent basis.

React Faster Become exception-driven.

Clear operations performance thresholds and activate an alerting process

Automated solutions can sift through all the activities, uncovering the truly important information and understanding the domino relationships and cumulative effects of multiple events.

Shortening the time to know about a problem drives faster response and reduces the magnitude of any impact

React Faster Respond immediately to reduced or cancelled demand. • It is critical that companies react to unplanned cancelled

demand with equal fevour as when trying to meet an unexpected new order.

• When the customer cancels an order or reduces forecast, many times the customer service representative (CSR) removes the order and that's the end of it.

Bridge the Divide Knock down the internal silos. • Ensure that demand and supply are looked at together - by

everyone.

• Individual groups need to take a more holistic and real-time view of the interdependencies. A key part of this process is the ability to simulate various demand-supply scenarios and their associated action alternatives to increase preparedness for the various possibilities that may unfold or have unexpectedly taken place.

Bridge the Divide Increase customer collaboration.

• Determine which customers represent the bulk of your business, which customers exhibit the largest or most frequent changes in demand, and which customers provide you with the most profit.

• Demand co-planning. :The basic notion is that you need to move from a handoff process to a collaborative one, where you and your customers are collaborating more regularly on their demand requirements.

Understand the Impact

Align Demand Planning

Align demand management decisions with the operations performance metrics of the company

Demand Planning And Inventory

Service Level

Return On Inventory

Effective Demand Planning

Lower Inventory carrying cost

Measure and Improve Forecast Accuracy

Reduce Cycle Times

Improved Inventory Visibility

Benefit of Effective Demand Planning on Inventory

• Improve on-time delivery performance.

• Lower inventory levels while increasing inventory turns.

• Reduce inventory obsolescence.• Reduce cash-to-cash cycle times.• Improve profitability.

Questions if any

Thank You For Your Time And Consideration.