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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Eurosérum chooses FuturMaster’s solutions to optimise production

Eurosérum chooses FuturMaster’s solutions to optimise production

Eurosérum, manufacturer of demineralised whey for infant food, is a subsidiary of the Sodiaal Group, the French dairy cooperative that produces 4.6 billion litres of milk every year and has a turnover of 5.4 billion euros.

Demand forecasting and production planning tools

Demand forecasting and production planning tools

The Food Storage and Distribution Federation is supporting a project which is part funded by the Technology Strategy Board to improve demand forecasting and production planning within the chilled and fresh food environment.

DynaSys launches 'Ready To Plan' 1.2 solution for retail and manufacturing companies

DynaSys launches 'Ready To Plan' 1.2 solution for retail and manufacturing companies

DynaSys S.A.S. – a division of QAD Inc. has announced the launch of 'Ready To Plan' 1.2 (RTP), a preconfigured Demand and Supply Chain Planning (SCP) solution for retail and manufacturing companies. It is also expanding its staff to better serve new and existing customers in France and Europe.

Services businesses meet customer demand with ClickSoftware app

Services businesses meet customer demand with ClickSoftware app

ClickSoftware Technologies Ltd. has announced the launch of the Capacity Planning App, enabling businesses to plan available resources and anticipated demand to deliver on promised Service Level Agreements (SLAs) and meet compliance standards.

Quintiq SCP&O Executive Summit - Düsseldorf June 12

Quintiq SCP&O Executive Summit - Düsseldorf June 12

June 12, 2014, 9:00 - 17:00 Hyatt Hotel, Speditionstraße 19, Düsseldorf, Germany

Join us to learn how industry leaders are using smart planning solutions to keep costs low while constantly improving efficiency and productivity. Top executives from KME, Van den Bosch Transporten, Copenhagen Airport and Brussels Airport will be on hand to share the latest industry best practices.

Whitepaper: Planning for sporadic & slow-moving parts

Whitepaper: Planning for sporadic & slow-moving parts

This whitepaper looks at the challenge of managing forecasts for sporadic and/or slow moving parts within the normal business forecasting processes.

It discusses techniques that have been developed to accurately forecast demand and efficiently manage the inventory for such items. Download the report here.

Demand Solutions Summit 2014

Demand Solutions Summit 2014

The 21st annual Demand Solutions Summit in the United Kingdom promises to be the best yet. The event will include discussions of products, best practices and market trends. As always, it also offers ever-valuable networking opportunities. The Summit will kick off on May 21 with hospitality day.

Seven methods that improve forecasting accuracy

Seven methods that improve forecasting accuracy

According to Gartner, companies that excel at demand forecasting average 15% less inventory, 17% stronger perfect order fulfilment , 35% shorter cash-to-cash cycle times, and one-tenth as many stock-outs as their peers.

Infineon shortens planning cycles by half with JDA Sales & Operations Planning

Infineon shortens planning cycles by half with JDA Sales & Operations Planning

JDA Software Group, Inc., The Supply Chain Company, has announced that Infineon Technologies AG has shortened its planning cycles, improved its forecasting accuracy and increased productivity using JDA Sales & Operations Planning (S&OP).

Top myths about optimisation – Busting the half-truths that keep you from maximising your returns.....

Top myths about optimisation – Busting the half-truths that keep you from maximising your returns.....

The difference between good optimisation and great optimisation can run to millions of dollars in savings.

Dramatic improvements across KPIs – even in enterprises that are already industry leaders – are possible with effective optimisation.

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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