Demand Planning

Demand/Supply Integration inputs

Demand forecast and capacity forecast

Demand/Integration outputs

Demand plan, operational plan, financial plans or the "business plans

What to do if demand exceeds supply?

-Dampen demand by price increases or reduction in promotions
-Increase capacity: additional shifts, outsourcing production, acquiring additional sources of raw materials or components, speeding up throughput
-build inventory: allow inventory to accumulate

Demand plans

These represent the decisions that emerge from the DSI process that will affect sales and marketing.

Operational plans

These operational plans represent the decisions from the DSI process that will affect the supply chain.

Financial plans

These represent signals back into the financial planning processes of the firm, based on anticipated revenue and cost figures that are agreed to in the DSI process.

plan-driven forecasting

This aberration arises in the not-uncommon scenario where forecasted demand fails to achieve the firm's financial goals.

Two outcomes are likely from plan-driven forecasting.

First, supply chain planners go ahead and manufacture products that correspond to the artificially inflated forecast, with the result of excessive, and potentially obsolete, inventory.
Second, the supply chain planners say to themselves, "I know darn well

DSI as a tactical process

Often, there is no real DSI process in place�no scheduled meetings where demand-side representatives and supply-side representatives interact to discuss issues or constraints. In the absence of a defined process, there is significant risk for major discon

Lack of alignment with sales and marketing

This disconnect is most problematic when there are capacity constraints in force, resulting in product shortages or allocations. Recall the scenario described at the beginning of this chapter, where the sales organization at the apparel company was incent

Siloed cultures, mis-aligned reward systems, lack of training, and inadequate information systems can all conspire to undermine ______ _________

DSI processes.

5 Critical Components of DSI

Portfolio and product review
Demand review
Supply review
Reconciliation review
Executive review

Characteristics of successful DSI Implementation

1. Implementation is led by the business unit executive. In other words, DSI cannot be a supply chain-led initiative if it is to be successful.
2. Leadership, both top and middle management, is fully educated on DSI, and they believe in the benefits and c

Which of the following are key "levers" of the culture change that is needed to drive successful DSI implementation?
Organizational structure
All of the above

All of the above

What is a time series technique?We

Time series uses historical data to try and identify patterns�trend, seasonality, noise.

What is regression?

Correlation between sales and an independent variable.
What is correlated to Kleenex for Kimberly Clark? Allergy season. Run historical correlation to see how strong it is.

What is the bias metric in forecasting?

MAPE measures the error, bias tells you whether the error is consistently too high or to low. Ex. supply chain wants to keep inventory minimum, sales wants to pump up the forecast because they are optimistic about how much they will sell and wants to have

Delphi Method

Talk to a group of experts about the topic because you don't have any historical data for new things. Write on paper, vote, repeat until you get a consensus forecast.

Weighted Moving Average

most recent time period usually gets the most weight.