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About Demand Planning LLC

Demand Planning LLC, based in Boston MA, is a consulting boutique comprised of seasoned experts with real-world supply chain experience and subject-matter expertise in demand forecasting, S&OP, Customer planning, and supply chain strategy.

We provide process and solutions consulting, as well as customized training across a variety of industries.

Through our knowledge portal DemandPlanning.Net, we offer a full menu of training programs through in-person and online courses, as well as a variety of informational articles, downloadable calculation templates, and a unique Demand Planning discussion forum.

  • 01Jan

    As we are about to ring in the New Year, here is a moment to contemplate on what we have seen in 2012 and what looks like in 2013.

    It appears 2013 will be the year to shift major paradigms!

    Since I am not psychic, I am just looking at trends to see if they extend, fold or just just go no where!!

    1. The Big Data Bandwagon will get even bigger!

    Just like outsourcing was the buzzword in 2002, Big data is the current buzzword to attract venture funds, IT investments and even for job seekers to find a higher-paying job! Big Data buzz will get even bigger in 2013!

    2. Integrated Business Planning will take over from S&OP!

    More c-Level managers will start to look for a process that can effectively leverage Big Data above to make decisions based on predictive analytics! Only the thought leadership will happen in 2013. The technology and the software field is wide open with no identifiable players ready to facilitate IBP.

    3. Outsourcing Demand Planning Best practices will become more prevalent

    Companies in SMB will look to outsource their demand planning efforts, not necessarily eliminate demand planners, but the process to achieve consistency and sustainability in demand planning!

    4. We will see much higher visibility of Demand Management!

    The entire process to demand shape, sense, plan and manage demand will achieve higher visibility in Corporate America. People with such skills along with business experience will be most sought after for lucrative positions through out the world!

    5. User-unfriendly technologies will suffer a bigger blow in 2013!

    Software technologies that are not user-centric or user-focused will find themselves losing market share in 2013 with potential casualties including SAP and Apple (yes – Apple Computer has joined that camp in the post-Jobs era)!

    Let us prepare for 2013 and do the right thing and make the right moves!

    All of us at Demand Planning Net wish you a happy and prosperous New Year 2013! Enjoy a fun and safe New Year’s Eve!

    Sincerely,
    Mark Chockalingam
    Demand Planning LLC

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  • 20Jul

    Is there a single KPI for the entire organization? Possibly, two metrics qualify as good KPIs.

    1. Net Profit = Total Income minus all Expenses. This is a Dollar number and ignores the scale. It can be measured with a target like an EPS target or a profit target. But this measures fails as a comparison metric. So the correct format will be Return on Investment. I believe this is highlighted in APICS CSCP courses. Remember Dupont Analysis.

    1. OTIF – This is a noble measure as well. Most supply chains should strive to provide the required service level to keep customers happy. But service levels cost money – real money in fact plenty of dollars. So this has to be balanced against the cost of providing the service ==> inventory costs, expediting costs, reserve capacity costs. One can provide OTIF if they have an unlimited cost budget.

    So this OTIF does not qualify as an organizational measure unless measured against cost. So we have the problem of “no denominator” here. No corporate management will like an OTIF level at a very high execution cost. You can lose your shirt and go out of business. Even Charitable organizations should have an OTIF measured against execution cost.

    I generally believe there should be two metrics for every function.  See my other entries on this blog and the www.demandplanning.net web pages.

    Going back to single KPI for the entire organization, that may still be possible if we look at Corporate Finance literature………

    Even ROI does not qualify as that single measure. Finance literature says that ROI is not adjusted for firm risk. For example, you can borrow a lot of money and invest. This will increase your firm risk.

    At least according to the Noble laureates in Finance, the single best measure for a company is its stock price. The goal of a CEO is to maximize stockholder value.

    Perhaps that sounds too capitalistic, but that is one reason most middle management to upper management gets rewarded with stock options. Perhaps everyone in the organization should be rewarded with some stock options.

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  • 04Jun

    We discussed the S&OP Process in our two-day tutorial.  There was a question about if there is a list of steps in implementing such a a process.  Here is my outline and our implementation approach as a company:

    1. Assess the key objectives of the Planning Process- Identify and Involve stakeholders in Sales, Supply Planning, Operations, Marketing, and Finance during the process definition phase. Interview key General Managers and understand their informational needs from the Sales and Operations Planning process
    2. Identify the key pain points- Since Sales and Operations Planning is a collaborative process, the key is in establishing and improving internal communication and collaboration. The best approach is to start with the question, where do we have communication roadblocks? We need to identify areas where communication is missed, or ineffective. We also need to identify where communication is too late to be acted upon. An example of such a pain point will be to learn of a service failure for the first time in a score-card meeting after the end of the month
    3. Identify the Key Component Meetings- The key step in the process design is to plan and establish effective communication and decision sessions among the various functions. Our meeting design will derive from several white boarding sessions that revealed the various pain points in the process (step 2) and the key touch points in the organization. Where the touch points are heavy and involves frequent information sharing, that will indicate the need for a formalized information sharing session. Typically, the key meetings include the Demand consensus meeting, Supply Collaboration Meeting, the General Manager Review meeting, and the Operations Review meeting. In most organizations, there will be an executive Sales and Operations Planning meeting. But the type and content of the meeting depend on the needs of each organization
    4. Design Content and Timing of Meetings- Working with functional players from the key touch points, we will establish the type, sequence and timing of each meeting during the planning period. Through white boarding sessions, we will help you establish the key contents and the objective of each meeting
    5. Meeting Templates- we will help you design appropriate templates and summary reports to facilitate the meetings to be focused on key issues and arrive at a consensus recommendation. Demandplanning.net, with a vast collection of process reports in its knowledgebase, will help you design a template that is customized to the process needs
    6. Supply Collaboration Process- Once a consensus demand forecast is finalized, Supply planners will refresh their planning systems to arrive at their new schedule with constraints. The new demand may point to imbalances in their supply process including issues in raw materials, finished goods inventory, manufacturing schedule, and capacity constraints. The collaboration process should consider these issues to problem solve and decide a set of supply constraints to be acted on in the Operations Review meeting
    7. Budget Shortfall Review- Depending on the pain points of the current organizational process, we design this meeting to reconcile top-down financial and marketing forecasts with the operational demand plan. The GAP identification and resolution is a major part of the Sales and Operations Planning Process
    8. Exception Management- A well-defined process will thrive on exception management. All Component meetings will start with a follow-up of issues from the previous meeting and deal with exception issues highlighted by the meeting templates. A concise design of meeting templates will help you achieve brief, sharply focused, effective meetings
    9. Sales, Operations and Inventory Planning- This is a key part of the Operations Planning and review. The organizational consensus team will examine the Sales, Production and Inventory Plans and discuss major issues and bottlenecks
    10. Supply constraints and Scenario Management- The budget shortfalls may trigger management decisions on additional promotions and even key new product introductions. The process should be designed to be flexible enough to accommodate key top management requests to verify supply availability for key sales generating events. Promotions on key items can only be offered if adequate inventory is available or can be turned around in time to meet the promotional demand
    11. Value Chain Metrics- The Sales and Operations Planning process will be guided by the various value chain metrics that highlight performance and pin point areas of improvement. The Metrics should be a good indicator of the state of the business and should call for quantifiable corrective action. The design of the metrics should help you align incentives holistically to help achieve the organizational objectives. The key metrics include customer service (FTFR), inventory targets, forecast accuracy, on-time delivery, order cycle times. Demandplanning.net will help you design metrics customized to how various functional players are aligned in your organization. With our research and analytics in this area, we have a unique advantage in designing proper Supply Chain Metrics and implementation

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  • 20Mar

    I saw this interesting discussion posted on a linked-in forum.

    Balancing Inventory and Service

    With a “hot” new product, or even your cold old products, how do you balance inventory and service? Forecasting isn’t the way. Who even listens to the weather man anymore?

    This makes me think about the utility of demand forecasts in corporate Supply chains.

    1. Do Supply chains really use demand forecasts?  I have seen many inventory strategies actually using the standard deviation of historical demand in their calculations.  What happened to the forecast error?
    2. If forecast is not used, what is the alternative?  What happened to medium to long-term planning?

    So I decided to summarize my response to this question:

    As long as you don’t leave your demand forecasting to the weather man, you should be alright.  Most supply chain problems originate by ignoring the forecasting that is happening through out the organization.  In a survey I remember reading a couple of years ago, on average 50% of the people in an organization were forecasting something or other.

    If the forecasting process is bad, fix it! You ignore and move on at your own peril!

    Even folks in supply chain who badmouthed forecasting actually were using an average run rate of some sort to determine their inventory calculations.  There is an article from the Harvard Business Review in that talks about most organizations operating inside the inventory curve rather than on it.  The inventory curve is a set of feasible points that trade off between service levels and required inventory.

    Perhaps the reasons many companies operate inside the inventory curve, as suggested by the article, is because the supply chain function ignores the demand forecast and uses the historical average as their forecast for their inventory strategy.

    If there is a reasonably good demand planning process installed in any organization, we can establish this will easily beat out the “run-rate” or any other average hands down.

    Even in the case of iPad, a hot new product, the decision to create the product was a result of a market forecast that estimated potential users and share. The decision to build capacity and manufacturing was based on a long-range forecast.

    Why different functions create forecasts?

    Inventory is a problem but is only one of many problems. Organizations need to solve a variety of challenges and constraints to solve so they can thrive and grow. Organizations need to plan for the medium to long-term and manage the business accordingly. 50% of the functions forecast but NOT necessarily for inventory purposes.

    • Senior management needs to forecast an EPS for investors and need to hit it within a reasonable threshold.
    • Companies need a long-term forecast to assess what they need in capital investment and where and how to build the facilities for expansion.
    • Even HR needs a forecast.

    Thinking every function will be forecasting for the supply chain is like the Dilbert Cartoon “Sure – I will drop everything else and will focus on your problem.

    So forecasting and planning is embedded in various functions and various forms through out the organization and is unavoidable.  The key is how to leverage the forecasting responsibility and accountability already installed into a holistic process that can let you piggy back and obtain a supply chain forecast for your short-term and long-term planning.

    Ignoring the corporate forecasting machine and creating an isolated forecast or an inventory deployment algorithm is a sure way to significant troubles – what we preach as the fragmented planning process or the lack of the often glorified “S&OP” process.

    In reality, 50% of the organization involved in forecasting is not the problem. The real problem is when supply chain decides to ignore the forecast or the forecasting process and decide to move on in isolation.

    Demand Planning LLC does use and recommend advanced algorithms for demand forecasting and leveraging customer input. But that is only half our story.  We work with Sales, Marketing, Supply chain and Senior management to drive a holistic process to leverage demand information and build forecasting processes that are used across most of the organization.  We call this consensus demand process or integrated business and operations planning.

    APICS and supply chain professionals need to re-think their philosophy when they decide to abandon/ignore/side-step the demand forecast.  Anyone who does so actually does a dis-service to the organization and to the profession!  Ignoring the forecast can be a great marketing technique to sell expensive software that preaches using volumes of transactions data.

    You can read more about the Demand Planning process at

    http://demandplanning.net/demandplanningconsults.htm

    and the S&OP process at

    http://demandplanning.net/sales-and-operations-process-redesign.htm

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