Post on 06-Mar-2018
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Demand ,S&OP and
Inventory Optimization
using Oracle
Felix Ribalov
www.Vplanning.com
Sense, shape, and respond to demand and supply real time
Agenda
• Demand forecasting – accommodate to vast
portfolio.
• Automate Consensus Planning – Integrated S&OP
Process.
• Proactive promotion management – align
promotions with value.
• New Products introductions – Must for product
and customer segmentation.
• Inventory Optimization for service level.
Leverage best-in-class Statistical Engine
• Improved forecasting provides a
more accurate baseline bottoms up
forecast to the consensus process
• Automatic model selection provides
improved accuracy over “best fit”
approaches
• Includes multiple factors such as
causal factors, seasonality, trend, as
well as decomposing the affects of
promotional events
• Automatic forecasting level selection
on the forecasting tree
• Nodal based definitions
Causal Analysis
Outlier Detection
Promotion Events
Seasonality
Cyclical Patterns
Trend
Historical
data Bayesian
Estimator
Forecast
Multiple
causal
factors
Combined
model
Bayesian
Optimizer
Start with a better prediction of demand
Automate Consensus Planning Inclusive Consensus Process Improves Plan Quality and Acceptance
• Create consensus plan through continuous collaboration across sales, marketing, finance, supply chain and customers
• Each participant gets tailored view – Configurable worksheets
• Calculate accuracy for each participants forecast input
• Combine top down business planning with precise bottom up forecasts
• Automate process with workflow – Send reminders
– Task notifications in dashboard
Sales
Mgrs
Sales
Forecast
Sales: Plan by Product Line
Plant
Mgrs
Operations
Forecast
Manufacturing: Plan by Plant
Sales Reps
Marketing
Forecast
Marketing: Plan by Region
Asia Americas
Finance
Forecast
Finance: Budget in Dollars
Review statistical forecast and add sales
dem
Automate Process using Workflow Focus by segment– Different process for different segments
• Seeded workflows to
automate the sales
and operations
planning process
• Focus on the Value
added segments
• Easily configurable
Analyze promotion effectively
• Baseline versus incremental volume – Provides decomposition of incremental volume from
advertising, promotions, or sales incentives
• Granular lift analytics – Incremental volume lift coefficients maintained at
lowest level
– Localized promotion analysis
– Allows shipments/replenishments to be adjusted by
ship-to location
• Cross product and customer effects – Determines cross-product cannibalization impact
– Adjusts forecasts for product and customer
cannibalization Baseline
Incremental
Typical
Competitive
switching
Long term
growth
Pre and Post
promotion
effect
Cross product
cannibalization
Oracle
Demantra
Baseline
Enable segmented promotions without killing demand forecast accuracy
New Product Introduction
Derive forecast for new product and adjust forecast based on actual demand
Automatically detect outliers
Demand of comparable products based on characteristics
Accurately forecast demand for new products based on existing data
Improve Planner Productivity
• Task oriented dashboards
• Excel like worksheets – Context sensitive
– User configurable workspaces
– Copy and paste multiple cells and rows
– Shared and private worksheets
– View in any unit or currency
• View data at multiple levels in hierarchy of
choice
• Simultaneous update and view multiple
worksheets and perform side-by-side
comparisons
• Color coding based on exceptions
• Flexible formulaic expressions
• Online notes with audit trail
• Off-line mode with automatic sync and MS
Excel integration
Configurable user interface replaces need for individual
spreadsheets while ensuring enterprise database access and
security
Oracle Inventory Optimization
• Make better inventory
investment decisions by
including variability
– Demand variability
– Supply variability
– Lead time variability
Account for supply chain variability in your hedging strategy
Least Risk
Inventory
Investment
Strategy
Demand Variability
Supply Variability
Lead Time
Variability
Service levels
and Budgets
Time phased safety stock at each node
in the supply chain network
Variability • Demand and demand variability
• Supply lead time variability (supplier,
production, transportation)
Supply Chain Data
• Multi-echelon network
structure
• Alternates, sourcing
rules
• Costs (carrying,
production,
procurement,
transportation)
How It Works
Objectives
• Goals
– Maximize profit
– Minimize cost
• Desired service level
• Budget constraints
• Trade off customer service level
with total cost
• Choose the best service level
strategy based on
– Inventory carrying cost
– Production cost
– Procurement cost
– Transportation cost
– Revenue
– Profit
• Compare alternative business
scenarios
Invest in the most profitable scenario Determine the most profitable channels, products, and customers
Enforce service levels
• Establish target service levels by
– Product
– Customer
– Channel
• Extensive defaulting to start
quickly
– Assign by plan, category, or specific
item or customer
• Manage commitments to key
customers
• Manage product portfolio
– Vary service level by margin or stage
of life-cycle
Vary service levels by product, customer, or channel
Oracle Inventory Optimization Why it is different
• Multi-echelon
• Optimal postponement
• Buffer inventory pooled
• Multi period
• Enhanced modeling
– Lead time variability, fulfillment time
• Business realities considered
– Capacity constraints and alternates
• Single-echelon
• Ad-hoc postponement
• Little or no pooling
• Single period
• Limited modeling
– No lead time variability, fulfillment time
• Business realities ignored
– Capacity constraints and alternates
Higher inventory, lower service Lower inventory, higher service
The Momentum Continues…
Medical
Media & Entertainment
Consumer Packaged Goods
Retail/Wholesale
Consumer Durables
High Tech/Industrial
We predict the impact of today’s business decisions on
tomorrow’s business performance
Aircraft Engines
Service and Spare parts
Agriculture
Q U E S T I O N S
A N S W E R S
Provide insight to key decision makers
Advanced Planning Command Center • Compare alternative
business scenarios
– Planners execute
scenarios
– Automatically translate
detailed planning
information to corporate
metrics
– Track assumptions and
attach supporting
documents
• Approve and drive into
execution
– Choose your baseline plan
– Drive tactical and
execution decisions
• Monitor
– Continuously monitor
performance and get real-
time visibility to deviations
Demantra DM ASCP / SNO IO
Business
scenarios
Assigned
activities
Planners execute assigned activities
Suggested
alternatives
for evaluation
Combine necessary decision making information for decision makers
Single versus Multi Echelon Planning Reduce safety stock (SS) – SS proportional to square root of lead time
Regional DC
Transfer LT = 4d Transfer LT = 4d
Processing LT = 4 d
Transfer LT = 4d
Customers Plant Supplier Central DC
Single echelon: SQRT(4) = 2 units ; total SS = 8 units
Regional DC
Transfer LT = 4d Transfer LT = 4d
Processing LT = 4 d
Transfer LT = 4d
Customers Plant Supplier Central DC
Multi echelon: SQRT(16) = 4 units = total SS
• Hold SS at nodes with lower inventory cost
– Without degrading service level
– Typically upper echelons, prior to value being added to the product Ex. Hold at Central DC versus Regional DC
Ex. Hold raw materials versus finished goods at the plant
– Increases flexibility – use shared buffer inventory at common nodes
• Inventory Optimization approach with postponement
– Total safety stock (in equivalent finished good units) is unchanged in absence of sharing / pooling – no service level degradation. Safety Stock value is reduced.
– Sharing/pooling reduces total safety stock even further
Postponement
Per unit inventory value increases closer to the point of consumption
$0.25 $0.50 $0.75 $1.00
Regional DC
Transfer LT = 4d Transfer LT = 4d
Processing LT = 4 d
Transfer LT = 4d
Customers Plant Supplier Central DC
Postponement Reduces inventory value
Regional DC
Transfer LT = 4d Transfer LT = 4d
Processing LT = 4 d
Transfer LT = 4d
Customers Plant Supplier Central DC
$0.25 $0.50 $0.75 $1.00
Regional DC
Transfer LT = 4d Transfer LT = 4d
Processing LT = 4 d
Transfer LT = 4d
Customers Plant Supplier Central DC
Optimal Postponement: Total SS = 4 units = $3.25
$0.25 $0.50 $0.75 $1.00
No Postponement: Total SS = 4 units = $4.00
Provide insight to key decision makers
Advanced Planning Command Center • Compare alternative
business scenarios
– Planners execute
scenarios
– Automatically translate
detailed planning
information to corporate
metrics
– Track assumptions and
attach supporting
documents
• Approve and drive into
execution
– Choose your baseline plan
– Drive tactical and
execution decisions
• Monitor
– Continuously monitor
performance and get real-
time visibility to deviations
Demantra DM ASCP / SNO IO
Business
scenarios
Assigned
activities
Planners execute assigned activities
Suggested
alternatives
for evaluation
Correlate information from different sources in Adv Planning Command Center
22
Compare scenarios – 360 degree visibility Analyze across key demand, supply, capacity, finance, and exception metrics
Integration with Advanced Planning
Command Center provides
pre-built self-service dashboards for
comprehensive S&OP and Risk analysis
Supports real-time sales and operations planning process
Integrated strategic and tactical decision making
Start quickly through seeded templates
Integrated performance management
Why Oracle !