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  1. is periodic shifts in demand lasting more than a year
    e.g. Housing demand follows business economic cycle
  2. These applications can be sourced from the following options
    -Custom developed for the organization
    -Packaged solutions contained in a larger supply chain management system
    -Modules within an ERP system
  3. Improved Customer Service Through Better Forecasting Techniques
    Lower Inventories for Higher Profits
    Improved ROI on Technology Investment
    Improved Relationships Between Trading Partners
    Cost Reduction
  4. the requirements plan with the production constraints, i.e. Advanced Planning & Scheduling (APS)

    -Limitations can include material, facility, equipment and labor availability
  5. establishes the ground rules for the collaborative relationship
    Business goals
    Scope of collaboration and assignment of roles
    Checkpoints / milestones
    Escalation procedures
  6. Forecasts+Customer orders + promotions
  7. -Facilitates more effective planning with shorter cycle times.
    -Offers capability to consider the extended supply chain and make appropriate trade-offs to achieve optimal performance.
    -More effective and responsive planning allows a more level assignment of resources for existing sourcing, production, storage, and transportation capacity.
    -Greater integration with financial plans.
    -Increased inclusion of strategic initiatives and activities.
    -Improved simulation and modeling of alternatives.
    -Easier translation between aggregate and detailed planning levels.
  8. -Improving accuracy of forecasts requires error measurement followed by analysis
    -Choice of method for error measurement

    Simple average error can hide problems as positive errors are offset by negative ones
    Mean Absolute Deviation (MAD) evaluates absolute error by ignoring the sign of the error
    Mean Absolute Percentage Error (MAPE) is mean MAD divided by mean demand
  9. Evaluate technique both quantitatively & qualitatively for:
    Forecast time horizon
    Value of forecasting to business strategy
    Data availability
    Type of data pattern
    Experience of the forecaster
  10. Support collaborative planning
    -Collaborative forecasts help avoid inventory
    excesses and out-of-stock situations
    Drive requirements planning to determine
    -Inventory projections
    -Replenishment requirements
    -Production requirements
    Improve resource management through cost trade-offs of strategies such as
    -Extra production capacity
    -Extra storage capacity
  11. Demand Variability
    -Distribution (retail stores) gains and losses
    -Competitive Activity
    -Economy (private labels)
    Scale of Information from Marketing & Sales
    Promotions - Increased Complexity
    Supply Issues
  12. Strategic planning starts the process - 3-5 year horizon

    Integrated Operations Planning - Deliver the plan!
    Monitor, control, adjust for actual variance from plan
  13. -A meaningful forecast process requires integrated and consistent combination of components

    Faulty communications are costly for supply chains
    -Seek to reduce forecast inconsistency across
    multiple members of the supply chain

    Efforts to perfect a single component do not overcome need for other components

    Process design should consider strengths and weaknesses of each individual component
    -Design for optimal performance of the overall
    integrated system
  14. relies on expert opinion and special information
    Costly and time-consuming
    Ideal for situations with little historical data or when much managerial judgment are required
    Developed using surveys, panels and consensus meetings
  15. Period demand - inventory-on-hand - Planned receipts
  16. Demand planning
    Production planning
    Logistics planning
    Inventory deployment
  17. : consists of sales forecasting, order planning/forecasting, inventory positions, and transit lead times.
  18. Plan
  19. Customer demands for higher service levels and more product variations with
    A management focus to reduce supply chain assets
  20. Begin Inventory + Production - Demand = Ending inventory
  21. focuses entirely on historical patterns and pattern changes to generate forecasts
    "The past is a good predictor of the future"
    e.g., moving averages, exponential smoothing, extended smoothing, and adaptive smoothing
  22. (Base damnd X Seasonal X Trend X Cyclic X Promotion) + irregular
  23. 1.)Develop a joint business plan
    2.)Create a joint calendar to determine product flow
    3.)Create a common sales forecast based on shared knowledge of each trading partner's plan
    -Share common forecast between retailer and
    -Use an iterative process to share the forecast and
    requirements plan
    4.)Use the common sales forecast to develop
    -Production plan
    -Replenishment plan
    -Shipment plan
  24. 1.) Supply Chain Visibility
    2.)Exception management to respond to disruptions and minimize/prevent potential problems
    3.) Enables identification of trade-offs that can increase functional costs, but lower total system costs
    -Stay focused on the customer!
  25. -Organizational processes
    -Personal responsibility and accountability
    -Information systems (financial, marketing and supply chain planning)

    Using this S&OP combination, the operations and sales groups must overcome conflicts to develop consensus and then execute their collaborative plans
    Finance also plays a key role in dollarizing the impact of decisions
  26. is long-range shift in periodic sales
    Positive, negative or neutral
  27. exception management and performance assessment.
    Exception management is actively monitoring planning and operations for out of bound conditions
    Performance assessment is evaluating the achievement of business goals to uncover trends or develop alternative strategies.
  28. Executing the process every month
    Process ownership and clarity of roles and responsibilities
    Organizational commitment to achieving high forecast accuracy (senior management commitment & performance objectives)
    Focus should be on the next 3 to 12 months (not short-term)
    One plan that integrates the actions of the entire organization
    Senior management decision making (bottom-up / top-down)
    Measuring end-to-end supply chain performance
    S&OP forecast versus operating plan or budget
  29. Production planning uses requirements from demand management to develop a realistic supply plan

    Must integrate with manufacturing (and 3rd party) resources and constraints

    -Requirements plan defines what items are needed and when

    -Effective planning creates a time-sequenced plan
  30. is demand swings initiated by a firm's marketing activities
    Advertising, deals, or promotions
  31. Functional leadership from all key operating areas must be committed to the S&OP process and be responsible for achieving success
    Supply Chain Planning, Sales & Marketing, Manufacturing, Finance
    Tie manager's compensation to successful S&OP performance
    Include regular involvement and accountability at the general management level
    Tradeoff decisions may negatively impact a functional area
  32. uses specific information to develop relationships between lead events and forecasted activity
    e.g., simple or multiple regression
  33. Demand management system is the information technology component of the sales and operations planning (S&OP) process

    Demand management develops the forecasts used by other supply chain processes to anticipate sales levels

    Forecasts are then used to determine production and inventory requirements

    Must maintain forecast data consistency across multiple products and warehouse facilities
  34. is annual recurring upward or downward movement in demand
    e.g. Toy demand before Christmas
  35. is long-term average demand after other components are removed
  36. Forecasting in many companies is typically a "best fit line" using history
    The problem is that you can be driving down the
    road by looking in the rear view mirror. The future
    might be significantly different than the past.
    May low ball the forecast numbers because if actual
    sales exceed their forecast, they can look like hero's
    in the organization.

    May inflate the forecast numbers to essentially
    create "2 sets of books", the real forecast and the
    inflated forecast to ensure that Logistics plans for
    plenty of inventory
  37. movement demand, vehicle availability, and relevant movement cost into a decision support system that seeks to minimize overall freight expense

    -Analysis suggests ways freight can be shifted among carriers or consolidated to lower expenses
  38. Moving average -- weighted average previous period sales
    Exponential smoothing -- WEIGHTED MOVING AVERAGE using smoothing constraints
    Regression -- Time period as the independent variable
    Time series -- Other independent variables such as price, promotion plans
    Multivariate -- Complex statistical techniques
  39. includes random or unpredictable quantities that do not fit other components
  40. Historical forecasts
    Promotional plans
    Pricing changes
    New product introductions
  41. Forecast is the specific definition of what is projected to be sold, when and where

    Forecasting is a critical capability

    Many logistics and supply chain activities must be completed in anticipation of a sale

    Forecasting approaches to achieve:
    -enhanced service or reduced inventory

    Improve forecast accuracy
    Forecast at a higher level of aggregation
  42. Overcomes these problems resulting from individual perspectives

    Limited economies of scale
    Limited information sharing
    Excessive transportation expense
  43. CFPR is a business model that takes a holistic approach to supply chain management and combines the intelligence of multiple trading partners in planning and fulfilling customer demand by using common metrics, language and firm agreements to improve efficiency for all participants.

    CFPR links sales and marketing best practices - category management, supply chain planning and execution processes to increase availability while reducing inventory, merchandizing, transportation, and logistics costs.

    Developed to reduce unplanned and uncoordinated events that distort the smooth flow of product throughout the supply chain (reduces bullwhip effect)
  44. Matches product requirements of customers with capacity of enterprise/supply chain.
  45. consists of order generation, and order fulfillment.