Tag Archive: demand planning

The Value of Demand Planning

February 13th, 2018

In supply chain circles, there are lots of exciting concepts to discuss and debate such as lean, master scheduling, theory of constraints and many more; however, we have found that our most successful clients start with the customer!  

If you concur that we are in an Amazon-impacted marketplace where the customer is king (no longer is it cash!), prioritizing demand planning is essential.  

Do you have a position focused on demand planning?  Or do you have someone who knows it is at least part of their focus?  Does anyone realize its importance?  Let’s discuss the value…

  1. Without customers, you have no company– understanding their needs and what will compel them to buy from you vs. the competition couldn’t be more important.
  2. Do you know how your forecast compares with the recent past?– Again, understanding your customers and why they are changing couldn’t be more important to positioning your business to succeed long-term.
  3. Let’s take a step back – do you have an idea of what you think you’ll sell this year?– Let’s hope so!  Imagine how hard it will be for your HR resources, your operations resources (to determine which machinery to prioritize, purchase and train on), your suppliers and more to run efficiently while serving you and your customers if everything is a surprise.
  4. Is your sales mix changing? – We’ve seen many clients who spiral into a mess not because they don’t have a forecast but because they have no idea that the product mix has changed.  Different products come with different materials, different skills, different complexity and different requirements overall.
  5. What is the timing?– We’ve also seen clients with predictable annual sales (actually incredibly predictable) yet the monthly, weekly and daily sales could be vastly different.  Operations couldn’t keep up.  The customer suffered.  Margins declined.  Timing matters!

We would venture to estimate that 99% of our clients can benefit from an increased focus on demand planning.  Why not give it a go?  If you would like an audit of your current process, please contact us.

 



SIOP Success is a Straight Line to People

May 26th, 2016
SIOP success

The technical aspects of SIOP still have to filter through people. Success happens when everyone in an organization is operating from a single integrated plan.

As with everything in business success, SIOP (sales, inventory and operations planning) success is a straight line back to people. Thus, it is the reason I started my business with the “Profit through People” brand and continue with it as one of our service lines and for our newsletter. In the last 5 years, we have completed many SIOP projects and have found the keys to delivering rapid, bottom line results – exceptional customer service, significant growth, improved margins, accelerated cash flow and high morale. These keys to success are built into our proprietary process for SIOP, 4 EXCEL, which drives exponential results.

Even though SIOP is all about aligning demand with supply and has many technical components ranging from demand planning to master scheduling to inventory strategy and cash flow planning, we have gained the most significant results by aligning ALL areas of the organization on one page – the PEOPLE! There is no coincidence that the first of the 4 E’s of EXCEL is ENGAGE.

Some of the most challenging issues we’ve faced while implementing SIOP had nothing to do with the technical components. For example:
• How do we get sales and production on the same page?
• Can R&D and production work to one integrated plan?
• How can we align our customers and suppliers on the same page?
• How can we get finance, sales and operations on the same page?
• And so on…

We find that becoming expert in culture change and collaboration is important to success. Clearly, communication is at the crux of this equation as well. If you are thinking about how to get each of these parties to see how SIOP will benefit them to align on one page, give us a call to learn more about 4 EXCEL.

Did you like this article? Continue reading on how to Profit Through People:

4 Excel for SIOP Success

Why Are Communications So Difficult?

 



SIOP/Integrated Business Planning

July 7th, 2015
siop helps put the planning puzzle together

Manufacturing and distributing product to meet customer demand can be like a puzzle unless you start using SIOP as a core process to run your business.

SIOP (sales, inventory, & operations planning) taken to the best practice degree is often associated with integrated business planning. In some circles, they are seen as interchangeable. In others, it is seen as the “next step” for SIOP. It is nomenclature to me as I see fully leveraging SIOP as common sense.

Substantial results will follow. For example, several of my clients have achieved one or several of the following with SIOP/Integrated Business Planning: 1) successfully supported dramatic growth; 2) improved service levels; 3) slashed lead times; 4) improved margins; 5) accelerated cash flow; and 6) increased productivity.

Why not use SIOP as a core process to running the business? Wouldn’t that be a common sense approach to success? As the famous William Occam said, “The simplest solution is often the best”. This also syncs up with what I’ve found to be the most successful philosophy – start with the simple and expand with what will provide the most value to your organization.

So, what are the common keys to success?

  1. Start with demand: It is always appropriate to start with demand. Focus in on your customers. What do you expect your customers to buy? Which products are most popular? What else can you offer your customers to go the extra mile? Getting a solid handle on demand is a great place to start.
  2. Forecast accuracy: The more predictable your sales, the less inventory you’ll need to carry to meet customer expectations. How volatile are your customers’ ordering patterns?
  3. Rolling # of months or years: As each month goes by, you’ll want to add a month to the end of your planning cycle. In essence, the concept of a rolling plan is essential to ensure you take the long-term, continually reviewed and updated view. I love the way one of my manufacturing clients describes this concept – it’s like a conveyor system where one month drops off and the next one gets added on.
  4. Inventory strategy: Your inventory strategy is one of the factors that will be used in the development of the master schedule. How many turns are achievable for your industry and in supporting your company strategy? Inventory is used to cover volatility and lead time. What is needed?
  5. Service level plans: What are your customer expectations? Where do you stand in the market? Should you shoot to be competitive, distinct or breakthrough on service and lead times? These factors will affect your resulting inventory expectations.
  6. Master schedule: Translate the demand into supply requirements. Combine demand, inventory strategy, level loading, and lot sizing into a master production schedule.
  7. Purchase plans: Translate your master schedule into a purchase plan. Similar to the master schedule, combine the master schedule, inventory strategy, level loading and lot sizing into a purchase plan.
  8. Inventory plan: Once you know your demand plan, master schedule and purchase plans, the resulting inventory plan will follow.
  9. Capacity plans: How do your staffing and machine capacity plans align with your master schedule? Will you need to ramp up? Cross-train? Purchase machinery and equipment?
  10. Cost & margin plans: It only makes imminent sense to sync these plans with your cost improvement plans. Assuming you have a good handle on your pricing and mix, a margin plan will emerge.
  11. Cash flow plans: Once your inventory plan is known, it is achievable to estimate cash flow requirements and plan accordingly. Will you need financing? Can you support your growth and investment objectives with your inventory strategy?
  12. Make vs. buy decisions: Strategic decisions including make vs. buy options will arise through the SIOP process. The right people are together to evaluate what will provide the most value for the business.
  13. Capital plans: Certainly, capital plans will be a by-product of the SIOP process.
  14. Collaboration plans: How do your integrated business plans align with your customer and supplier programs? Share critical information and collaborate for success.
  15. Communication & alignment: One of the key advantages of a SIOP process is to align ALL functions, customers and suppliers on one plan. Clarification rules!
  16. One plan: The concept of one plan is paramount to SIOP success as the 80/20 is in alignment, collaboration and execution with clarity.
  17. Action items: Let’s not forget action items. Without solid execution and follow-up, no process will thrive. 

If you follow these key factors for success, your monthly SIOP process will align resources and result in a rolling forecast that integrates with your financial plans and operational plans. In essence, you’ll have the 80/20 of running a successful business in one place.  

Continue reading on how to strengthen your Eagle Eye:

The Benefits of SIOP  

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Where Should I Start to Ensure Demand Planning Success?

May 18th, 2015
forecasting

It’s easy to feel lost when you have no direction from customers about their own sales projections. Get a clearer picture through demand planning.

80% of companies are not in front of their demand. How can you decide what to plan for if you don’t know where you are going? You don’t! Thus, it makes sense to spend time upfront to determine your best estimate for customer forecasts and your demand plan.  Don’t worry about perfection as the definition of a forecast is that it will be inaccurate; however, you can get in the ballpark. By achieving this goal, you will better serve your customers, grow your business and improve margins.

If you are unsure where to start, consider digging into the following:

1. Talk with customers: Pick up the phone and find out what is happening with your customers. Are they promoting certain items? Or focused on specific locations? What are they seeing in terms of demand further down the supply chain?

2. Talk with Sales: Certainly Sales should be staying on top of what is important to customers. Ask Sales which products, categories, and/or customers should be the focus.

3. Talk with Customer Service: Customer Service can often be overlooked as they might not be perceived as strategic; however, they can have extremely valuable insights into customer demand. Customers are likely to tell them about upcoming demand, challenges, and other valuable information about the customer.

4. Ask for demand data: Often times, customers will have information about what their customers are purchasing. Ask for the data that pertains to your items. If you are able to gain data, you can perform analysis of your customers’ customers’ preferences. It can yield a goldmine of information.

5. Look for market intelligence: What does your market project? For example, if you are in aerospace, you will likely track the number of airplanes Boeing, Airbus, etc. are producing. You’ll then be able to extrapolate what your forecast is likely to be.  Even if you are not in an industry with long-term market intelligence discussed in the news, market insights will still exist. Knowing your industry can go a long way!

Generating a demand plan that is a reasonable representation of your company’s growth is the first step to implementing a SIOP (sales, inventory, & operations planning) process which can yield substantial results. It starts with superior customer service and delivers profit and accelerates cash as you optimize and balance your demand with your supply.

Did you like this article? Continue reading on how to be the Strongest Link in your supply chain:

Demand Planning Best Practices 

Sales & Operations Planning Drives RESULTS

 



Demand Planning Best Practices

July 17th, 2014
new mindset leads to new results

A reenergized demand plan is fortified with meaningful data trends that point the way to improved service levels and increased profit margins.

Sales and operations planning processes are key to improving service levels, accelerating cash flow and increasing margins.  Thus, it is worth pursuing the seemingly simple process of aligning demand and supply and your executive team on one plan.  It must start with the demand plan.

1. Talk with customers – it is surprising how often this secret to success is overlooked and not utilized.  Your customers will provide a wealth of information if you ask.

2. Review the data for trends – don’t get sucked into the data black hole!  Instead, review data for trends.  Are sales increasing in a certain area or product line?  It will give you follow-up items to discuss with your customers.

3. Focus on exceptions – one of the advantages of a forecasting system is that it will typically point out exceptions which are out of tolerance.  Whether your software points these out or you look for them manually, focus the 80/20 of your energy on those exceptions as it will drive results.

4. Dig deeper in your supply chain – ask your customers for end user data, point of sale data or any other data which will give you a better understanding of what is occurring deeper in your supply chain.  It is surprising how often it is available yet the goldmine is ignored.

5. Think about the market – talk with your sales and marketing teams, research the market, and get a feel for what is likely to occur in the market.  This will give you directional information for whether your demand plan is in the ballpark.

Did you like this article? Continue reading on this topic:

Do You Need Systems for a Successful SIOP Rollout?

Sales & Operations Planning Drives RESULTS