Demand Management - 2018 LOA Symposium

1 The AFIT of Today is the Air Force of University: The Intellectual and Leadership Center of the Air ForceAim - Fight - WinDemand Demand ManagementManagementThe AFIT of Today is the Air Force of University: The Intellectual and Leadership Center of the Air ForceAim - Fight - WinThe Supply Chain Management ProcessesSupply Chain Management ProcessesLogisticsMarketingFinanceTier 2 SupplierConsumer/EnduserManufacturerInfo rmation FlowPurchasingProductionTier 1 SupplierCustomerR&DPRODUCT FLOWCUSTOMER RELATIONSHIP MANAGEMENTPRODUCT DEVELOPMENT AND COMMERCIALIZATIONRETURNS MANAGEMENTORDER FULFILLMENTDEMAND Management Supply Chain Management Institute. Source: Supply Chain Management : Processes, Partnerships, Performance, p. 90 CUSTOMER SERVICE MANAGEMENTSUPPLIER RELATIONSHIP MANAGEMENTMANUFACTURING FLOW MANAGEMENTThe AFIT of Today is the Air Force of University: The Intellectual and Leadership Center of the Air ForceAim - Fight - WinWhat is Demand Management ? Demand Management balances the customers requirements with the capabilities of the supply is not just about forecasting!

2 Supply Chain Management Institute. Source: Supply Chain Management : Processes, Partnerships, AFIT of Today is the Air Force of University: The Intellectual and Leadership Center of the Air ForceAim - Fight - WinWhy Is It Important? It enables a firm to be more proactive to anticipated Demand , and more reactive to unanticipated Demand . It can have a significant impact on the bottom-line through: Increased sales Reduced inventories Reduced logistics costs Improved asset utilization Supply Chain Management Institute. Source: Supply Chain Management : Processes, Partnerships, AFIT of Today is the Air Force of University: The Intellectual and Leadership Center of the Air ForceAim - Fight - WinHow Demand Management Affects EVA Improve product availabilityImprove share of customer Lower safety stocksReduce storage and handling costsFewer transshipments and lower redist. costsReduce non-cost-of-money components of inventory carrying costsImprove market share due to fresher productReduce accounts receivableFewer expedited shipmentsReduced obsolete inventoryIncrease customer loyalty and repeat businessLower cost of raw materialsReduce manf.

3 Costs due to improved schedulingFewer split ordersImprove investment planning and deploymentImprove asset utilization and rationalizationLeverage transportation and freight consolidationReduce returns and markdownsCapital Charge%Net ProfitProfit from OperationsTaxesTotalExpensesGross MarginCost ofCapitalInventoryTotalAssetsCurrentAsse tsFixedAssets Other Current Assets ++SalesEconomicValueAdded =CGS Supply Chain Management Institute. Source: Supply Chain Management : Processes, Partnerships, Performance, p. AFIT of Today is the Air Force of University: The Intellectual and Leadership Center of the Air ForceAim - Fight - WinDemand ManagementCustomer Relationship ManagementStrategic Sub-ProcessesProcesses InterfacesOperational Sub-processesCustomer Service ManagementOrder FulfillmentManufacturing Flow ManagementSupplier Relationship ManagementProduct Development & CommercializationReturns ManagementDetermine Demand Management Goals and StrategyPlan Information FlowDetermine Synchronization ProceduresDevelop Framework of MetricsCollect Data/InformationForecastSynchronizeReduc e Variability and Increase FlexibilityMeasure Performance Develop Contingency Management SystemDetermine Forecasting Procedures Supply Chain Management Institute.

4 Source: Supply Chain Management : Processes, Partnerships, Performance, p. AFIT of Today is the Air Force of University: The Intellectual and Leadership Center of the Air ForceAim - Fight - WinThe Strategic Demand Management ProcessCustomer Relationship ManagementCustomer Service ManagementOrder FulfillmentManufacturing Flow ManagementSupplier Relationship ManagementProduct Development & CommercializationReturns ManagementStrategic Sub-ProcessesActivitiesProcess Interfaces Review firm s strategies Study supply chain network and bottlenecks Determine focus and goals for the process Determine level(s) of forecasts Determine sources of data Analyze different approaches Choose the most appropriate and plan forecasting processDetermine Demand Management Goals and StrategyPlan Information FlowDetermine Synchronization ProceduresDevelop Contingency Management SystemDetermine Forecasting Procedures Determine data requirements Determine sources of data Determine how forecast information will be shared Consider how inputs and outputs can be used to shape business strategy Link Demand Management performance to EVA Determine appropriate metrics and set goalsDevelop Framework of Metrics Develop list of potential interruptions to supply or drastic changes in Demand Determine event response procedure for each possible event Outline procedures for synchronization Determine long-term planning requirements Examine supplier/manufacturing capabilities Determine allocation procedures Supply Chain Management Institute.

5 Source: Supply Chain Management : Processes, Partnerships, Performance, p. AFIT of Today is the Air Force of University: The Intellectual and Leadership Center of the Air ForceAim - Fight - WinDifferent Types of power, some food produceTelecom, high-end computers, semiconductorsGrocery, basic apparel, food, oil and gasFashion apparel, computers, musicSupply UncertaintyDemand UncertaintyLowLowHighHighSource: Adapted from Hau L. Lee, Aligning Supply Chain Strategies with Product Uncertainties, California Management Review, Vol. 44, No. 3 (2002)The AFIT of Today is the Air Force of University: The Intellectual and Leadership Center of the Air ForceAim - Fight - require different supply chain strategiesRisk-hedging supply chainsAgile supply chainsEfficient supply chainsResponsive supply chainsSupply UncertaintyLowLowHighHighDemand UncertaintySource: Adapted from Hau L. Lee, Aligning Supply Chain Strategies with Product Uncertainties, California Management Review, Vol.

6 44, No. 3 (2002) and used with permission in Supply Chain Management : Processes, Partnerships, Performance, p. AFIT of Today is the Air Force of University: The Intellectual and Leadership Center of the Air ForceAim - Fight - WinThe Strategic Demand Management ProcessCustomer Relationship ManagementCustomer Service ManagementOrder FulfillmentManufacturing Flow ManagementSupplier Relationship ManagementProduct Development & CommercializationReturns ManagementStrategic Sub-ProcessesActivitiesProcess Interfaces Review firm s strategies Study supply chain network and bottlenecks Determine focus and goals for the process Determine level(s) of forecasts Determine sources of data Analyze different approaches Choose the most appropriate and plan forecasting processDetermine Demand Management Goals and StrategyPlan Information FlowDetermine Synchronization ProceduresDevelop Contingency Management SystemDetermine Forecasting Procedures Determine data requirements Determine sources of data Determine how forecast information will be shared Consider how inputs and outputs can be used to shape business strategy Link Demand Management performance to EVA Determine appropriate metrics and set goalsDevelop Framework of Metrics Develop list of potential interruptions to supply or drastic changes in Demand Determine event response procedure for each possible event Outline procedures for synchronization Determine long-term planning requirements Examine supplier/manufacturing capabilities Determine allocation procedures Supply Chain Management Institute.

7 Source: Supply Chain Management : Processes, Partnerships, Performance, p. AFIT of Today is the Air Force of University: The Intellectual and Leadership Center of the Air ForceAim - Fight - WinDemand VolumeHighDemand VariabilityLowHighLow Supply Chain Management Institute. Source: Supply Chain Management : Processes, Partnerships, Performance, ApproachesMake-to-Order EnvironmentPeople-Driven ForecastsData-Driven ForecastsxxxxxxxxxxxxxxxxxxxThe AFIT of Today is the Air Force of University: The Intellectual and Leadership Center of the Air ForceAim - Fight - WinCollaborative Planning, Replenishment and Forecasting (CPFR) Supplier and customer both generate forecasts at the SKU level, and enter them into a database on the internet. The system compares the forecasts and flags any discrepancies over a pre-prescribed level. The differences are resolved: two sides work together, typically electronically, or rule-based systems are put in AFIT of Today is the Air Force of University.

8 The Intellectual and Leadership Center of the Air ForceAim - Fight - WinThe Strategic Demand Management ProcessCustomer Relationship ManagementCustomer Service ManagementOrder FulfillmentManufacturing Flow ManagementSupplier Relationship ManagementProduct Development & CommercializationReturns ManagementStrategic Sub-ProcessesActivitiesProcess Interfaces Review firm s strategies Study supply chain network and bottlenecks Determine focus and goals for the process Determine level(s) of forecasts Determine sources of data Analyze different approaches Choose the most appropriate and plan forecasting processDetermine Demand Management Goals and StrategyPlan Information FlowDetermine Synchronization ProceduresDevelop Contingency Management SystemDetermine Forecasting Procedures Determine data requirements Determine sources of data Determine how forecast information will be shared Consider how inputs and outputs can be used to shape business strategy Link Demand Management performance to EVA Determine appropriate metrics and set goalsDevelop Framework of Metrics Develop list of potential interruptions to supply or drastic changes in Demand Determine event response procedure for each possible event Outline procedures for synchronization Determine long-term planning requirements Examine supplier/manufacturing capabilities Determine allocation procedures Supply Chain Management Institute.

9 Source: Supply Chain Management : Processes, Partnerships, Performance, p. AFIT of Today is the Air Force of University: The Intellectual and Leadership Center of the Air ForceAim - Fight - WinSynchronizationForecastDistribution CapabilitiesManufacturing CapabilitiesSupply CapabilitiesDemand Execution PlanMarketingFinanceManufacturing & SourcingLogistics Supply Chain Management Institute. Source: Supply Chain Management : Processes, Partnerships, Performance, p. AFIT of Today is the Air Force of University: The Intellectual and Leadership Center of the Air ForceAim - Fight - WinThe Strategic Demand Management ProcessCustomer Relationship ManagementCustomer Service ManagementOrder FulfillmentManufacturing Flow ManagementSupplier Relationship ManagementProduct Development & CommercializationReturns ManagementStrategic Sub-ProcessesActivitiesProcess Interfaces Review firm s strategies Study supply chain network and bottlenecks Determine focus and goals for the process Determine level(s)

10 Of forecasts Determine sources of data Analyze different approaches Choose the most appropriate and plan forecasting processDetermine Demand Management Goals and StrategyPlan Information FlowDetermine Synchronization ProceduresDevelop Contingency Management SystemDetermine Forecasting Procedures Determine data requirements Determine sources of data Determine how forecast information will be shared Consider how inputs and outputs can be used to shape business strategy Link Demand Management performance to EVA Determine appropriate metrics and set goalsDevelop Framework of Metrics Develop list of potential interruptions to supply or drastic changes in Demand Determine event response procedure for each possible event Outline procedures for synchronization Determine long-term planning requirements Examine supplier/manufacturing capabilities Determine allocation procedures Supply Chain Management Institute. Source: Supply Chain Management : Processes, Partnerships, Performance, p. AFIT of Today is the Air Force of University.