2011 Fall CAUG Session
QAD Demand Management
Lance LaCross, CPA, CPIM
QAD Solutions Consultant
October 9, 2011
2011 Fall CAUG Session
Agenda
• Forecasting Goals
- What & When Do we Need It?
• Solution Overview
- Basic Forecasting
- Demand Management
• Demand Management V6.1
- Components & New Features
• Summary
2
Fall 2011 CAUG Session
Forecasting Definition
• Comprised of Two Words
- Fore
• Look Out
- Casting
• Throw Out
3
Value Chain
4
Balance – Supply vs. Demand
Demand
Options:
Supply
Options:
Forecast
DRP Order
Customer Orders
Purchase Order
DRP Order
Manufacture
Order
5
Statistical Probability
• Example - Dice In A Craps Game
6
Audience Questions
• How are you forecasting today?
- Excel?
- 3rd Party Package?
- Crystal Ball?
How many SKUs?
What does your product hierarchy look like?
What is your input to the forecast?
Do you conduct a formal Sales &
Operations Planning Meeting?
• What type of adjustments are made?
•
•
•
•
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Demand Forecasting Goals
• Understanding and predicting customer demand is
vital to manufacturers and distributors to avoid
stock-outs and maintain adequate inventory levels.
While forecasts are never perfect, they are
necessary to prepare for actual demand. In order
to maintain an optimized inventory and effective
supply chain, accurate demand forecasts are
imperative.
• Similar to a dice game - to win you want to minimize
the probability of inaccurate data used to drive
your organization
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Typical Demand Forecasting Goals
• Reduce forecast error
- At SKU Level
• More time spent in analysis versus hunting for
issues
- Exception based
• Provide an easy, consistent method for
capturing inputs to the forecast
- Know accuracy by sources of input
- Capture thoughts on adjustments
• Use the forecast and customer orders to
drive planning
9
Sample Requirements
• Twelve to Eighteen Month Visibility
• More Process Automation
- Takes 10 hours to compile data to get to the
sales staff and Export to Excel.
• Ability to Handle Growth
- What happens if we double our business?
- Getting forecasts from new acquisitions?
- What if we decide to drive MRP with forecast?
• It has to be easy enough for the sales force
to use and provide input.
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QAD Basic Forecasting
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QAD Basic Forecasting
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QAD Basic Forecasting
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QAD Basic Forecasting
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QAD Demand Management – Tool To Help
With Your Navigation
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Demand Management Defined
• Demand Management:
- Extensive statistical forecasting based on history, forecast, or
other data series
- Alerts to notify of exceptional circumstances
- Inventory policies based on forecast variability and service
level
- Collaborative forecasting between suppliers and customers
- Sales and Operations Planning
“…actively managing demand signals to better sense
demand (think of monitoring consumption instead of
orders), [and] incorporating downstream data with a
higher frequency of modeling (weekly or daily)”
-- Source: AMR
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QAD’s Demand-Driven Suite
•
•
•
•
•
Demand Management Engine
Collaborative Portal
Inventory Optimization
Rough-cut Planning
Sales & Operations Planning
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Demand Management
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QAD’s Demand Driven Suite
Collaborative
Portal
Informal
QAD
Inventory
Optimization
ERP
Excel
SQL
Access
Other ERP
Demand
Management
Engine
SCM
Rough
Cut
BI
S&OP
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Sales & Operations Planning
Demand
•Demand Planners
•Sales & Marketing
•Category Management
•Product Management
Forecast Demand
Executive Review
Consensus
Supply
•Supply Chain
•Operations
•Engineering
•Logistics
Actual Results
Reviewed & Analyzed
Resolve Issues
Set Direction
Determine Strategic
Impact
Forecast Supply
Re-Forecast &
Consensus Meeting
Executive Review
Meeting
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Assisting the Supply Chain
•
•
•
•
•
•
•
Forecasting
Communicating
Life Cycle Management
Optimizing
Balancing
Planning
Measuring
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Forecasting
• Robust statistical
engine
• Error tracking
• Allocation
• EDI, POS, and
on-line data
• Planning bills
22
Forecast Maintenance
• Daily, Weekly, Quarterly, Monthly Buckets
• Forecasting horizon is user defined
• Forecast can be shipment, order history,
etc.
• Unlimited years of history
• 32 forecasting algorithms with best fit,
email and on screen alerts, and 26
accuracy measurements
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Statistics, Methods & Techniques
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Hierarchies
• Hierarchies are used to:
- View data at aggregate levels such as Product
Class, Sales Region, or Customer
- Reconcile changes made at various levels
- Provide history to create statistical forecasts at
aggregate level
F
O
R
E
C
A
S
T
Division
Product
Group
Product Type
Tools
Hand
Tools
Wrenches
Power
Tools
Hammers
Table
Saws
Hierarchies
• Top Down
• Bottom Up
• Middle Out
SBU
MARKET
FAMILY
PRODUCT
PRODUCT
DIST CENTER
FAMILY
MARKET
PRODUCT
CUST
DIST CENTER
PRODUCT
CUST
DIST CENTER
SUPPLY-SIDE HIERARCHY
DEMAND-SIDE HIERARCHY
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ERP DM Integration
Forecast
Demand
Management
QAD
Sales History
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Communicating
•
•
•
•
•
Share information
Exceptions
Promotions or events
Reporting
Security
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Life Cycle Management
• Specific calculations
• Profiles
- Like New Items
• Cloning/same as
• Collaborate
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Optimizing
•
•
•
•
•
•
Optimize:
Safety Stocks
Service Levels
Order Points
Periods of Coverage
Lead Times
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Balancing
• Balance Supply &
Demand through
key resources
-
Equipment
Raw Materials
Labor
Subcontracting
• What-if Analysis
33
Planning
• Link medium to long
term operations
- Business goals
- Operational planning
- Financial planning
• Model effect on
supply capabilities
and financials
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Measuring
• Improved visibility
• Enhanced decision
making
• Reporting and
analysis capabilities
for all levels of the
enterprise.
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DME 6.1 Overview
• Demand Management Engine
-
New user interface
Filters and Exceptions
Hierarchy Manager
Profile/Lifecycle Forecasting
Event Manager
• DME Admin Tool
- New features, better control, greater flexibility
relative to Base Unit
• Improved Planning Portal for collaboration
DME Viewer – New User Interface
DME Viewer
Hierarchy
Profiles
Custom Task Manager
Conversions
Conversion Groups
Notes
DM Engine, Admin Tool & Batch Scheduler
•DME Admin
•Batch Scheduler
Views Available
•Multi Series
View
•Series
•Data
View
•Graph View
Information
Graph Filters
Filter Management
Exceptions
• Used in the DM Viewer to limit series
displayed
• Selects series with observation data that
meets a defined criteria
- Example: Find SKU’s with unusual growth
- identify SKU’s with no sales for 6 months
- identify large user adjustments
Exceptions
Data Permission & Domains
• Permits system administrator to restrict
access to information by job function or
individual
- Sales reps for Customer X could be limited to only
view the historical sales and forecasts for their
customer
- Regional Marketing Managers could be limited
to view and adjust promotional information in
their regions only
Events
• Events are special situations or actions that
can change forecasting behavior
• Examples of Events:
- Sales promotion expected to drive volume up
20% for a month
- Store closing for remodeling will result in selling
20,000 less units over a two month range
- New contract ensures the sale of 10,000 units
over the next four months
Event Manager
Procast = “Best Fit”
• Method used to select the “best fit” time
series forecasting techniques
• Judged to be one of the most accurate in
the world
• There are over 30 other forecasting methods
available including:
-
Slow Moving Item
Exponential Smoothing
Regression
New Product
Lifecycle
Lifecycle Forecasting
• Create forecasts without demand history
based on where a product is in its lifecycle
P
r
o
d
u
c
t
C
y
c
l
e
Volume
Introduction
Maturity
Growth
S
t
L a
i g
f e
e s
Time
Decline
New Report Viewer
• New Report Viewer for DM 6.1
• Template reports can be modified or new
ones can be created:
- Budget Variance, Lag Analysis, Margin Summary,
Workflow Status, Notes/Adjustments and more
• Easy integration with Excel
Standard Forecast Reports
User Defined Reports
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Comparison Excel Output
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Planning Portal
• Provides the foundation for collaboration with key
supply chain stakeholders
- Sales
- Marketing
- Customers
•Data
•Database Server
•Windows 2000/2003 Server
•SQL 2005/2008/2010
•Intranet/
•internet
•Web Server
•Windows 2000/2003 Server
•IIS 5.1/6.0
•Client
•(Windows 2000/XP/7
•IE 6/7/8/9)
DME Overview – Planning Portal
•Planning Portal
•PP Admin
Tool
Demonstration
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Summary
•
•
•
•
More sophisticated forecasting techniques
Forecast collaboration tool
Changes to forecast easily uploaded
Measure Actual to Forecast accuracy
- Exceptions and Filters
• Document reasons for forecast adjustments
- At series level or individual observations
• Aggregate Forecasts different views
- Hierarchy Manager
• Help with setting safety stock levels
• Rough Cut Capacity Planning
- Planning for projected warehouse requirements
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QAD Demand Management
Thank You
For Attending!
“Please Fill Out Your Survey”
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