Demand Planning vGen

8/6/2019 Demand Planning vGen

1/25


2/25

` Supply Chain Concept

` Typical FMCG supply chain gaps

` S&OP cycle

S&OP process Supply planning

` Organization gaps Demand Planner & CS Manager


3/25

Material & Product Flow

Cash Flow

Information Flow (both ways)


4/25

Servi eCash &

Cost

Safety,

environment

Cost to serve

Working

apital

Responsiveness

Freshness

CSL

(Reliability)


5/25

` Organization is focused to build the future Relati ely young organization

Technically capable, conduci e and open

` Supply chain planning is the key opportunity forimpro ement Confusion on which number to use

Instability of sales order, production schedule and milkrequirements

No formal in entory policy

Inefficient logistics network opportunity to reduce totalcost to ser e


6/25

` Demand/Supply planning area: Demand/supply/in entory model is not formally set S&OP process: need to define the monthly cycle

x Opportunity to integrate financial numbers in S&OP

Formal weekly demand/supply/AR monitoringx Key for Indonesia which major olume are thru distributors

` Customer ser ice: Poor sync with product a ailability Frequent credit hold Master data sync with modern trade customers

`


7/25

` Fix S&OP process Forecasting S&OP cycle Weekly monitoring Demand/supply balance

` Setup in entory policy More stable shipment Co er demand/supply ariability

` Fix credit hold issue

Increase bank guarantee of some distributors` Get immediate total cost to ser e sa ings

Combined fresh and ambient logistics for MT


8/25

S&OP is a Fi eS&OP is a Fi e--Step Process:Step Process:

PrePre--S&OP andS&OP and

Executi e S&OPExecuti e S&OP

may be combinedmay be combined

into one meetinginto one meeting

Output S&OP:Output S&OP:

1.1.Sales planSales plan

2.2.In entory planIn entory plan

3.3.Production PlanProduction Plan

8


9/25

The Basic S&OP Grid:The Basic S&OP Grid:History is included toHistory is included to

highlight past planhighlight past plan--toto--

actual performanceactual performance

In entory Plan = Planned OpeningIn entory Plan = Planned Opening

In entory + Planned ProductionIn entory + Planned Production --Planned SalesPlanned Sales

Actual In entory = OpeningActual In entory = Opening

In entory + Actual ProductionIn entory + Actual Production --Actual SalesActual Sales

9


10/25

1.2 MIDDLE-

TERMDEMAND

Strategic

3 years horizon

Tactical

1 Year horizon

Operational

3 weeks

Material requirementplanning (MRP-R/3)

Supply Network Planning(SNP)

Demand planning(DP)

1.1 LONGTERMDEMAND

3.1DISTRIBUTIONREQUIREMENTPLANNING

2.3

DISTRIBUTIONREQUIREMENT

2.4 MID-TERM

MASTERPLANNING

2.5 MATERIAL

REQUIREMENTPLANNING

2.1 INDUSTRIAL and LOGISTICS VISIONand STRAGTEGY

2.2 MATERIALCONTRACTS

Very short-term

3 days

3.4DEPLOYMENT

1.3 SHORT-

TERMDEMAND

3.2

SCHEDULING

3.3 MATERIAL

RELEASE ANDUSAGE

Production planningDetailed scheduling (PPDS /PPDS+)


11/25

` 5th: Sales & Marketing Forecast Meeting

` 12th: Supply Planning Process

` 17th: Pre S&OP meeting

` 22nd: Executi e S&OP` 25th: Long-lead-time MRP run

` 25th: Detailed next month sales plan


12/25

` E ery 5th of the month` Minimum participants: Demand Planner, TMM, BrandDirectors, NSM, Business analyst

` Optional in itee: Exco, NKAM, Finance` Agenda:

Past month re iew (month end) by Business Analyst Baseline presentation by Demand Planner for next 12 month

(M1-M12) constructed from 52 weeks. Focus discussion onM3+

Past assumptions re iew Marketing initiati es on M3+ (Brand Director)

Demand management for M0-M2 (Trade Marketing) STT pattern and impact to STD (NSM)


13/25

` Sales Forecast of next 12 months Ideally w/ weekly details a ailable for coming 2 months

` Documented assumptions

Learning of last assumptions New & adjusted assumptions


14/25

Baseline

Consumption trend: Habit, macroeconomics

Seasonal factor: school holiday, festi e

Shopper

Ad ertising, consumer promo

Weather, competition

Trade Route To Market seasonality, a ailability Trade promo/load/PPED, competition


15/25

Aug 6th, 2010 Actual Now Firm Plan Open Forecast -->>

Bottle 70ml M10 J10 J10 A10 S10 O10 N10 D10 J11 F11 M11 A11 M11

STD actual 1945 2264 2750

STT actual

Cons trend pull 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200

Cons seasonalities 73 73 73 -147 73 73Demand baseline 2200 2200 2200 2273 2200 2273 2273 2053 2273 2200 2273

Adv/shopper mkt

Consumer promo

Rain factor -45 -44 -45 -114 -103 -45 -22

Competition

Shopper pull 2200 2200 2200 2228 2156 2228 2160 1951 2228 2178 2273

RTM seasonalities-110 -110

Trade promo/load 100 -100

Trade PPED 22 22 22 22 22 22 22 22 22 22 22

Competitor trade

STT forecast 2322 2012 2112 2250 2178 2250 2182 1973 2250 2200 2295

Dist loading 400 -500 225 -218

Dist PPED 70 60 63 45 44 45 22 20 22 22 23

STD forecast 2722 1512 2112 2250 2178 2475 1964 1973 2250 2200 2295

After supply cut 2722 1512 2112 2250 2178 2475 1964 1973 2250 2200 2295

PPED -92 -82 -85 -67 -66 -67 -44 -42 -44 -44 -45

S&OP Net Volume 2630 1430 2027 2183 2112 2408 1920 1931 2205 2156 2250

Budget 2800 2770 3050 2350 3020 3500 3350 3230 1920 1931 2205 2156 2250

Latest LE 2323 1526 2073 2173 2173 2073 1920 1931 2205 2156 2250

Gap vs budget -855 -506 -420 -920 -993 -1317 -1238 -822 0 0 0 0 0

Gap vs Latest LE 427 -96 -46 10 -60 335 0 0 0 0 0


16/25

For consumers

Product a ailability at fair price and expected locations

Fresher products in good condition, guaranteed food safety

For company (also for distributors and retailers)

Tapping higher demand opportunity (higher sales)

Lower costs: smooth running plants, low stocks, low PPED

For suppliers and en ironment More stable supply plan, lower cost to do business

Lower CO2 emission due to well-planned deli eries


17/25

` Bias toward budget Forecast must represent our best estimate on market reality,

not what we wish we achie e financially

It is top mgt job to prioritize top line or bottom line

` Constraint thinking Worry about plant capacity, material shortages, etc

` Offsetting underdeli ery culture So we tend to put higher number

` Senior management inter ention

` Wrong forecasting le el SKU s family le el, national s regional le el

` Lack of learning and assumption documentation


18/25

` Long term: Plan what we will sell

` Short term: Sell what we ha e planned This is called DEMAND MANAGEMENT

This is reality in life. In all kind of businesses (withdifferent response time, cost sensiti ity, etc.)

` Example of demand management Offering a ailable fla or to the trade

Trade promo ensure the trade to push forward

In a restaurant, Special Today is to a oid PPED


19/25

` Put the marketing plan and assumptions on how

we can influence demand How much will consumer demand be increased?

Refer to past experience and how this time will bedifferent or the same

` Ensure the assumptions are documented

` Re iew the result after the plan is executed


20/25


21/25

` Use weekly forecast details from SMF outcome Check on material, capacity and workforce constraints

` To be lead by: PPIC

` Output is Construct options if constraint exists, by item


22/25

` We initially combine Pre and executi e S&OP

` Objecti es: To re iew total demand/supply

balance, recognize issues, generate options

` Participants: NSM, TMM, Demand Planner,Business Analyst, PPIC

` Agenda (demand planner to lead): Demand and supply issue

Options creation and recommendation Mid month re iew to include financial impact of each

option (Business Analyst)


23/25

` Monday noon W1 forecast update submission Re iew between NSM, TMM and demand planner Example: in Monday W30, forecast W31 is updated

` W

ednesday demand/supply meeting Weekly KPI: CSL, PSL and FAW-1 Re iew between demand planner and PPIC onW-1,W0

and W1

Identify gap s. current month S&OP numbers

Finance to join e ery 1st

(w/ SMF mtg) and 3rd

(w/ PreS&OP) week ofWed for closing/mid month re iew

` Friday: Submission ofW2 CMOD for distributors bynoon


24/25

` We need to determine in entory le el to co er Supply ariability (production + release ariability)

Production cycle

Quarantined

Demand ariability

` For R/P Materials, we need to co er Demand ariability o er lead time

Lot size (production or deli eries)

Supplier reliability


25/25

` Use the Japanese Takt time concept to establish

the flow For example, 250 cartons per day for an item

`

Based on weekly bucket, fixed e ery Thursday fornext week schedule Schedule is 70% fixed, only within 1-2days a week that

we reser e to absorb demand ariance

MRP to be run on weekly basis e ery Thursday

Demand Planning vGen

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