1. MEETING THE DEMANDS OF AN ON DEMAND WORLD

2. Collaborative Business Management CRM S&OP DEMAND MANAGEMENT INTEGRATION

3. Why Is It Important to Develop A Collaborative Business Management Process? Customers benefit from improved information and intelligence flow Alignment of all priorities throughout the entire value chain Fact based management Reduces emotion based decision making Improves Profitability

4. Demand Management At Work

5. Demand Management Strategy 1.Demand Management process is formalized and remains centralized and focused on interface to Consolidated Sales Forecast, historic trend data, and gap reconciliation between Sales projections and material drive forecasts. 2.Manufacturing production plan is loaded and correlated with the. annual business cycle. Demand Management expands postponement models and inventory management methodology to level production, and improve factory utilization. Goal is to align with inventory reduction, lead-time and service level targets, set by Demand Management Matrix

6. Demand Management Strategy (Cont.) 3. Establish a process which identifies all the elements to MAXIMIZE REVENUE while supporting Customer, Financial, Sales, Marketing and Operations requirements as it relates to Demand Management 4. Establish elements of the S&OP process Forecasted sales bookings Supply/Demand Planning (Methods, Techniques, Constraints) Pre-S&OP meetings to establish a consensus Collaboration and execution

7. Demand Management Requires Skills That Go Beyond The Use Of: Forecast software Communicating demand schedules via the internet or electronic data exchange Sales force automation ERP/ CRM capabilities

8. True Competency In Demand Management Comes From: Management desire Human judgment and intervention Excellence in business processes Educated workforce organized for success Excellence in execution

9. Demand Management Companies must change from functional silos within the organization to a more open concept of information flow and sharing.

10. Demand Management The dynamics of business today requires companies to work collaboratively to solve problems and to meet the requirements of the customers and internal profit goals.

11. The Objectives Of Collaborative Business Management Is: The alignment and consistent maintenance of the Financial, Demand and Supply plans. To achieve financial objectives through consistent decision maintenance with regards to Demand, Supply and Products.

12. Ineffective Demand Management Processes: Customer orders greater then forecast (Poor customer service, Sales Revenue Delays) Customers order more product or different product: (Supply organization has changing priorities, Expediting) Customer orders lower than forecast: (Increased inventory) Customers not ordering quantities F/C in a company with limited capacity: (Wasted Capacity)

13. Danger In Collaborating On Forward Looking Plans: Lack of vision to the true state of reality Different compensation programs New product introduction Optimistic management goals

14. Demand Planning 18 Month Planning Horizon Ability to react when the demand will not generate the sales revenues Ability to act when demand exceeds your supply capability Ability to look out into the following year for strategic and tactical planning

15. Who Needs To Be Involved In The Demand Planning Process? SALES MARKETING PRODUCT LINE MANAGERS MASTER SCHEDULING PURCHASING MANUFACTURING FINANCE

16. Companies need to create accountability in all areas for the creation and maintenance of the Demand Plan

17. Communications is the single most important factor in excellent Demand Management

18. Why Do Companies Fail When It Comes To Communications? Lack of detailed processes Lack of discipline in: –Data Gathering –Discussion of Issues –Decision making –Poor feedback Hidden agenda’s Bias’s

19. Demand Management Performance Measurements Develop demand plans based on A,B,and C products. Measure accuracy over a rolling 3 to 6 month schedule Measure the sum of the absolute deviations this process ignores the pluses and minuses effect due to mix. Measure market share Measure customer retention/acquisition Measure cost and profit per customer Measure return on sales Measures all inventory metrics Profit calculations

20. Demand Management Excellence The demand plan is a total collaboration between; Sales, Marketing, PLM, Demand Managers, Operations and Finance The demand plan validates that PLM, Marketing, Selling plans and Operations plans are in alignment and will meet revenue goals The demand plan is used to create the material drive plan The demand plan is dynamic and is reviewed and updated at least monthly

21. Demand Management Excellence (Cont.) The aggregated demand plan is stated in units and revenue plan by time period All assumptions in the demand plan are tracked and reviewed at least monthly The demand plan and business plan can be different. Demand plan revenue is compared monthly to the sales revenue plan and management develops plans to narrow or eliminate the differences Continuing education is in place to change culture There is complete understanding that the demand plan is a model and must be continually monitored and updated

22. Sales And Operations Planning The sales and operations planning process is used to synchronize demand, supply and financial planning. Validation of the company’s plans through the S&OP process will enable the company to achieve its strategic and financial objectives

23. Sales And Operation Plan The S&OP is the most realistic plan that a company can use to meet the monthly and quarterly: –Financial Goals –Customer Commitments –Operations Plans –Marketing Strategy –Engineering Changes –Sales Goals – Human Relations Goals.

24. Deliverables Of S&OP Distribute demand and supply information throughout the company Improve product life cycle management Provide a tool for contingency planning Stabilize the amount of subassembly and component variability for the manufacturing, shipping, and procurement functions Increase the accuracy of demand prediction Incorporate the concepts of Lean, Team- Based Problem Solving and Six Sigma

25. The Plan The S&OP plan will typically begin with a Revenue Plan. The plan would encompass horizon time frames that are commensurate with standard supplier and/or manufacturing lead times in the subject company’s specific business. When new products are common, a plan could easily have visibility out eighteen or twenty-four months.

26. Long-Term Benefits The plan directs Operations to make available specific quantities of products or families within specific time frames. It would establish future availability for products to assure that Sales and/or Marketing know what will be available to sell during that time period. Manufacturing and Suppliers can plan capacities and capabilities using the same plan after generating the plan through the requirements calculation.

27. Everyone Does Their Part... Forecasts are developed by some combination of Sales, Marketing and Operations. The plan is agreed upon before being incorporated into the demand plan. Operations agrees to produce to the plan. Sales agrees to sell to the plan, including only quoting deliveries based on the plan. Marketing agrees to measure it against actual and to be ready to change the plan within prescribed time frames to react to variability. Engineering agrees to provide product releases and engineering support to meet the plan.

28. Organizational Obligations of a Well-Functioning S&OP Process An objective organization to administer a disciplined process Cross-functional participation Participants who are empowered Well-organized meetings with agendas and defined objectives All functions must be represented at applicable meetings.

29. World Class Implementation of World Class Demand and Sales and Operations Planning will affect the way many people address their responsibilities. Silo elimination is a must. The implementation of a World Class Demand and S&OP process is a major “culture” change. As the monthly cycles occur, continuous improvement will be the objective. The S&OP process will be one-of-a-kind, designed around the specific business needs.

30. Survival To survive in today's competitive and global environment it becomes necessary for a company to achieve excellence in all strategic and tactical phases of planning and execution. A misstep in any area can ripple through the company and cause disastrous results. Collaboration, Communication and Cooperation are a must.

31. Ask for our Free Comprehensive Lean Readiness Check List and Supply Chain Assessment Lean Readiness Check List and Supply Chain Assessment Leave your business card with your e-mail address Marino Associates, LLC