Paul Greathopper
Areva Limited
St Leonards Works
Stafford
Staffordshire ST17 4LX
United Kingdom
105 East Lane
West Horsley
Leatherhead
Surrey
KT24 6LJ
T: 01483 284959
F: 01483 284959
M: 07831 611381
February 16, 2016
Dear Paul
Re : Sales Forecasting and Demand Management
Thank you very much for your time on Wednesday to give us the background on your Sales Forecasting and
Demand Management project. It was really useful to be able to have alook around at the products being made, and
then relate that back to the documentation that you had prepared. It is clear that the business needs a Sales
Forecasting process, and that it would be of enormous help.
I would just like to lay out how we might be able to proceed and work with you to facilitate the development of that
process easily and quickly.
Background
The key competitive weapon for Areva is to manage the lead time on the delivery of its products. If the Lead Time
goes out too far, then you lose business; if it comes in too soon then you do not make any real gains. The crucial
issue is the sudden arrival of large tenders, which will wipe out capacity at a moment’s notice, which have the dual
effect of lengthening lead times and also barging to the front of the queue – hence prejudicing deliveries to forecast
customers.
Clearly the solution is to put in place two processes :
1.
2.
A Formal Sales Forecasting process which captures the lates intelligence from Sales and Marketing people,
and adds this to “known” business based on a simple forecast by family. This process would need to capture
forecasts by region or country, and then be aggregated to a product level.
A Formal Demand Management process which assesses unforecast Demand, and then provides an agreed
promise date for all orders entered into the system.
The issue around putting these processes in place is normally assocaited with the difficulty of getting the Sales and
marketing functions to buy-in to the idea of putting together a forecast and then maintaining this on a monthly basis.
However, in your case you have already got the impetus to the project in place, as the relevant VP’s want the process
to be put in place. This is great.
So the task is to establish the process.
I believe there is one critical issue that we will need to address. That is the question of how the forecasts will “enter”
the SAP system. On reflection from our visit, you would seem to have the key problem that many company’s in a
Confgure to Order environment face. These companies will normally use Planning Bills to forecast the family amd the
options. The options are forecast via percentages. When orders are then placed by customers, the Planning system
will enter the orders through a configurator, but Forecasts can be consumed by orders at the Family level.
Thus you have a forecast for 100 per month of famliy “140”. When the order for 20 of the specific product comes in,
we would need to net the order off against the forecast. The system would need to recognise the family that it comes
from, and also the individual part that ir becomes. If you have set up the system with specific Part numbers, then we
might need to build something outside of SAP to manage this forecast consumption process.
However, the far harder task might be to persuade people to carry out the forecasting process.
Our proposal
I believe the best approach to establishing your process would be to come and spend a day with you first to fully
understand your existing processes around planning and order entry, and begin to see how Areva might establish its
Sales Forecasting and Demand Management process – it is vital to establish both. This would then allow us to tailor
our follow-up work.
We would then hold a two day workshop with the people most directly involved in the current planning and
manufacturing process, as well as one or two people involved in the selling process. The objective of this workshop
would be to get everyone onto a common platform of understanding the issues around forecasting and demand
management, and also to begin the process of designing precisely how the process will work. The course will deal
with the system issues, the organisational issues [e.g. the need for a central Demand Manager] and the process
issues that need to be dealt with in developing a proper Demand Plan supported by assumptions.
Our standard two day course covers :






Introduction to the need for a forecast
The Ten principles behind putting together a forecast
The Ideal forecasting process – how to develop a statistical forecast and then input “intelligence” from the
market place
Demand Management – how to manage Forecast comsumption and Abnormal Demand, to ensure that a
realistic promise is given to cutomers
Measurement of Forecast Accuracy and Customer Service
Implementation issues – which covers the key aspects that need to be considered in the design of the
Forecasting process.
This could then be followed up by around 4/5 consulting days/workshops where we would look to cover two aspects :
1.
Completion of the detailed process design
2.
Design the Education and training “package” that will be needed to support the usage by the Sales and
Marketing people within the regions of the new Forecasting process.
After this, I would have thought that you would hold a workshop to introduce to the Commercial and the Planning
people how the forecasting process would work, and they would then start working the process. It would be sensible
to try and develop a pilot of the process – say in the UK – first, before rolling out to all countries/regions.
The commercial basis on which we would charge this would be £ 1,600 per consulting day for the consulting support.
For owrkshops we charge a rate of £ 350 per delegate day for the first seven delegates and £ 300 per delegate day
for any delegates above seven. So a workshop for seven people for two days would cost £ 4,900. These costs
exclude VAT and any expenses for accommodation and travel to any destination, which are charged at cost.
Paul, I hope this gives an outline of our approach. I will give you a call in the next few days to see how we might be
able to progress your project. Thanks again for your time. We really look forward to working with you on getting a
European Sales Forecasting process in place, and then see it bring in the benefits of improved control of lead times.
Yours Sincerely
Richard Watkins
E: richardwatkins@delospartnership.com
W: www.delospartnership.com