Demand Forecasting, S&OP, CPFR

Demand Forecasting is a process of estimating the service or product quantity required by end customers. Demand forecasting techniques include the use of current or historical sales data to anticipate future demand. Other factors taken into consideration in make the final forecast are seasonal trends or 'events' trends. Data from finance, sales & marketing and production are all usually considered. The demand forecast that is arrived at is based on this combined information once fully assessed. Other software functionality elements include Sales & Operations Planning (S&OP). This is a business management process that takes into consideration data from both the business/finance and operational aspects of a company to reach determine a forecast or plan that best serves the whole organisation, rather than a segment of it.

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Infor announces major enhancements to supply chain management

Infor announces major enhancements to supply chain management

Infor, the industry cloud company, has announced general availability of Infor Advanced Scheduling (AS) version 11.

Logility announces Logility Voyager Retail Optimization V5.4

Logility announces Logility Voyager Retail Optimization V5.4

Logility Inc., supplier of advanced retail planning and supply chain optimization solutions, has announced the availability of Logility Voyager Retail Optimization V5.4.

Wolfberger selects Ortems planning software to improve the percent of fill and decrease inventories

Wolfberger selects Ortems planning software to improve the percent of fill and decrease inventories

Wolfberger group, expert in the wine, sparkling wine and spirits industry with 12% of Alsace AOC (Controlled Origin Label), produces more than 14 million bottles annually, of which 23% are dedicated to exports.

FuturMaster's 20th Anniversary Conference proves a major success

FuturMaster's 20th Anniversary Conference proves a major success

On 24th-25th September, the FuturMaster team welcomed customers, prospects and partners to what is reported to have been not only an entertaining evening at the Lido but also a highly informative day at Roland Garros.

Styrolution live with OMP Plus in four months

Styrolution live with OMP Plus in four months

Four sites of Styrolution have gone live with Operational Planning and Scheduling in OMP Plus within four months' time.

Spar boosts service levels to 99.5% through more effective daily planning

Spar boosts service levels to 99.5% through more effective daily planning

As a consequence of huge fluctuations in demand and extensive product ranges, for many retailers, consistently meeting the needs of their customers can be a real challenge.

AGR adds advanced demand planning and inventory optimisation functionality to Microsoft Dynamics family of ERP software solutions

AGR adds advanced demand planning and inventory optimisation functionality to Microsoft Dynamics family of ERP software solutions

Supply chain specialist and Microsoft Gold Certified ISV Partner AGR has launched AGR 5, the company's latest software release that features a brand new user interface and delivers advanced forecasting, replenishment, and demand planning functionality.

TXT Webinar 7th October: Optimising inventory with S&OP

TXT Webinar 7th October: Optimising inventory with S&OP

Supply Chain Managers and CFOs are well aware of the instrumental role that Sales & Operations Planning plays in inventory optimisation.

S&OP done properly helps mitigate demand volatility, allocate resources better and ultimately take well-informed inventory decisions that positively affect product availability and the bottom line.

DynaSys announces global planning solution for Zodiac Poolcare

DynaSys announces global planning solution for Zodiac Poolcare

DynaSys, a division of QAD Inc. and provider of demand and supply chain planning solutions, has signed a contract with Zodiac Poolcare, a global swimming pool and spa industry product company.

Assessing the Return On Investment of an Advanced Planning Systems (APS) project.... a DynaSys white paper

Assessing the Return On Investment of an Advanced Planning Systems (APS) project.... a DynaSys white paper

THE FUNCTIONAL SCOPE OF AN APS

There is some confusion about the definition of an APS (Advanced Planning System - Decision Support Solution for Supply Chain Planning), mainly related to its functional scope. Many vendors describe their software as an APS despite it only covering part of the core functionality required.

Forecasting demand is an important task for just about any type of business. Accurately projecting the demand for specific goods and services helps companies to order raw materials and schedule production of those products in a timely manner, making it possible to fill consumer orders quickly and efficiently without the need to build up a large inventory that adds to the tax burden of the business.

 

Demand Forecasting is the activity of estimating the quantity of a product or service that consumers will purchase. Demand forecasting involves techniques including both informal methods, such as educated guesses, and quantitative methods, such as the use of historical sales data or current data from test markets. Demand forecasting may be used in making pricing decisions, in assessing future capacity requirements, or in making decisions on whether to enter a new market.

 

Collaborative Planning, Forecasting and Replenishment (CPFR, a trademark of the Voluntary Interindustry Commerce Standards (VICS) Association), is a concept that aims to enhance supply chain integration by supporting and assisting joint practices. CPFR seeks cooperative management of inventory through joint visibility and replenishment of products throughout the supply chain. Information shared between suppliers and retailers aids in planning and satisfying customer demands through a supportive system of shared information. This allows for continuous updating of inventory and upcoming requirements, making the end-to-end supply chain process more efficient. Efficiency is created through the decrease expenditures for merchandising, inventory, logistics, and transportation across all trading partners.

 

Demand forecasting is used to determine the number of products or services that will be purchased by consumers in the future. Numerous methods can be used when integrating demand forecasting into any business.

 

Most demand forecasting methods fall under four basic categories or methods –

1)      Quantitative,

2)      Qualitative,

3)      Time series methods

4)      Casual method.

 

Quantitative Methods: These methods forecast demand levels based on analysis of historical time series i.e quantities sold in the past to forecast how much will be sold in the near future. This is usually a forecast that will provide numbers for the next sales year. Some examples of quantitative forecasting methods include last period demand, multiplicative seasonal indexes, and simple and weighted moving averages. Each of these use quantities sold in different types of mathematical formulas to determine how many products or services will be sold at the same times in the future year’s sales that is being predicted.

 

Qualitative Methods: These methods rely on experts who try to quantify the level of demand from the available qualitative data.

The two most widely followed methods are:

  • Jury of execution opinion method:  Opinions of a group of experts is called for and these are then combined to arrive at the estimated demand.
  • Delphi Method: In this method a group of experts are sent questionnaires through mail. The responses received are summarised without disclosing the identities. Further mails are sent for clarification in cases of extreme views. The process is repeated till the group reaches to a reasonable agreement.

 

Time Series methods:  Demand forecasting typically does use strategies in the time series method to forecast the demand of products and services. The time series method can be split up into two different types of methods. These include frequency domain methods and time domain methods. Even though the frequency domain method is classified as a time series method, it is not based on time, but on frequency of the occurrence happening or a product being bought. Time domain will show quantities purchases with respect to time.

 

Casual methods. These methods work under the assumption that underlying incidents can affect sales numbers of products and services. Examples of casual methods include seasonal activities such as ice cream sales or sales of gardening products. These casual methods also may use linear relationships between sales and another components that remain consistent over time. If the linear relationship remains consistent, then it is a safe prediction.

 

Demand forecasting encompasses many types of methods and is not limited to those listed here. This forecasting helps those in businesses to determine projected quantities of products or labour needed to provide services for future sales. In addition, demand forecasting can be an effective tool for those new to certain business industries. These methods can assist in writing business plans and obtaining the funds needed to fund a new business venture.

 

Sales and Operations Planning (S&OP) provides an updated forecast that leads to a sales plan, production plan, inventory plan, customer lead time (backlog) plan, new product development plan, strategic initiative plan and resulting financial plan. Variations in frequency of the plan depend on the type of manufacturing industry. Short product life cycles and high demand volatility require a tighter S&OP planning than steadily consumed products

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