Chevron process 1 © The Delos Partnership 2005 Sales Forecasting and Demand Management The process.

Chevron process 1 © The Delos Partnership 2005

Sales Forecasting and Demand Sales Forecasting and Demand ManagementManagement

The process


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


1. Capture Actual1. Capture Actual

• Each month we capture Actual History

• Captured from Order Entry Software - shipments



FilterDemand

Execute Forecast

CaptureActual




Hold Demand Review



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



FilterDemand

Execute Forecast

CaptureActual




Hold Demand Review



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



FilterDemand

Execute Forecast

CaptureActual




Hold Demand Review



Sales Forecasting: InputsSales Forecasting: Inputs

• New Customers• New Products• Pricing Initiatives• Advertising And Promotions• Cannibalisation• Customers Own Forecast• Competitors Activity• External Factors


Sales Forecasting: InputsSales Forecasting: Inputs

• New Customers• New Products• Pricing Initiatives• Advertising And Promotions• Cannibalisation• Customers Own Forecast• Competitors Activity• External Factors

MarketingPlans


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


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


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


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


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


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



FilterDemand

Execute Forecast

CaptureActual




Hold Demand Review



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


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



FilterDemand

Execute Forecast

CaptureActual




Hold Demand Review



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


Demand PlannerDemand Planner

Strategy

Customer RelationshipManager

Sales and Marketing

SystemForecast

Plan

ManufacturingAnd Purchasing

ERPSystem

Consensus ForecastConsensus Forecast


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

Chevron process 1 © The Delos Partnership 2005 Sales Forecasting and Demand Management The process.

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Transcript of Chevron process 1 © The Delos Partnership 2005 Sales Forecasting and Demand Management The process.