Forecast error and planning horizons + Time -

Customer’s order cycle The lead-time gap Procurement Manufacturing Delivery Logistics lead time Customer’s order cycle Order fulfillment Lead-time gap

Closing the lead-time gap Logistics lead time Customer’s order cycle

Demand penetration points and strategic inventory Driven by Demand Driven by Forecast

The information iceberg Order Cycle Time The Order Actual Usage / Demand

D C I DP The supply chain fulcrum (a) Key D : Demand DP: Decision Point C : Capacity I : Inventory

D C I DP The supply chain fulcrum (b) Visibility and Velocity enable the fulcrum to be placed nearer to Demand in order to reduce the need for inventory and/or capacity.

The supply chain fulcrum (c) D C I DP

Visibility and velocity drive responsiveness Postponement Bottleneck Management Reduce non- value adding time Simplification Streamlined processes Reduce batch sizes Velocity in-bound lead-times Synchronous Supply Strategic Sourcing Visibility Internal Integration Close to customers suppliers Collaborative Planning Event Shared Information Process Access to real demand

The sales and operations planning process Generate aggregate demand forecast Modify forecast with demand intelligence Create a consensus forecast Create ‘rough cut’ capacity plan Execute at individual item (SKU) level against demand Measure performance

The focus of demand management and planning Logistics and operations Sales and marketing Demand fulfillment Demand creation Demand fulfillment Demand creation Demand management and planning Alignment of demand creation and fulfillment processes across functional and organisational boundaries

VICS-ECR nine-step CPFR model 1 Develop collaboration agreement Retailer Supplier 2 Proposal Create joint business plan Proposal 3 Campaign/seasonal attributes Identify sales forecast exception Campaign/seasonal attributes 4 POS Create sales forecast 5 Exception items Resolve/collaborative on sales forecast exception Exception items 6 POS Create grocery store sales forecast 7 Create grocery store sales forecast 8 9 Central Order Supplier Delivery