CRM - November 2008 - (Page BPS4)

4 November 2008 Sponsored Content is the most widely deployed demand planning tool.” Unfortunately, spreadsheets typically lack sophisticated forecasting algorithms, aren’t built to track multiple inputs, and fall short in performing sophisticated analysis for various user groups within a business. Companies interested in more effective management of their supply chains have found that function-rich demand planning software can be a powerful tool to help managers take guesswork out of the planning process. Why? Because demand planning software recognizes a wide array of variables that influence sales projections. For example, while sales representatives typically view demand in a particular region based on the total revenue it produced, operations planners in the same firm view demand by quantities of each product sold. Demand planning software accounts for both variables. Demand planning systems typically produce a baseline forecast based on shipment or order history. Once established, users can change the baseline to account for other data, including promotions, advertising inserts, seasonality, new sales outlets, and other factors. At the same time, demand planning software factors in potential constraints such as materials availability and plant capacity. You can set up the system to switch from a “make” to a “buy” approach for a certain part or component any time insufficient in-house capacity exists. These systems typically yield four or five data streams, with varying forecasts. At this point, management plays a role in the planning process, overlaying broader strategic goals, such as reducing inventory and improving customer service. In addition, these systems usually offer notification functions, providing planners with automatic updates when certain events occur, such as a change of more than 30% from the previous month’s forecast. Most demand planning packages also offer simulation capabilities to compare multiple forecasts and their impacts on both revenue and profitability. Automotive manufacturer and distributor Hyundai Motor America uses point-of-sale data to build a demand forecast for its service parts. The company uses a demand management system to digest more than three years of parts sales data to calculate demand forecasts by part number for four warehouses, leading to an order plan for some 50,000 parts. The order is then sent to Korea, where the company is headquartered and where many of its parts suppliers are located. As a result, the company has reduced inventory and boosted its fill rate. SUPPLY-CHAIN COLLABORATION or distributor, they tend to center around key financial benefits: • Reduction of inventories, • Reduced warehouse space, and • Improved customer satisfaction, resulting in increased sales. For instance, by simply using a demand planning package, one manufacturer of tire products was able to cut supply orders by half and reduce peak inventories by 25% in the first year. These benefits can be so significant, in fact, that some manufacturers and distributors are going the extra mile for customers, providing vendor-managed inventories. “You do the replenishment for the customers and manage their inventory of your products for them,” explains MaxQ’s Pavain. Distributors offer the same service when they stock retailers’ shelves. Customers appreciate the extra attention, while manufacturers and distributors get direct demand signals from the market— removing much of the uncertainty from the planning process. One company using vendor-managed inventory is GM Brazil. Using customer demand data provided through its dealer network, the company’s vendor-managed inventory system drives sales forecasts for more than 20,000 parts. With the new system, initial forecast accuracy was more than 90%. Microsoft Dynamics is a line of integrated, adaptable business management solutions that enables you and your people to make business decisions with greater confidence. Microsoft Dynamics works like familiar Microsoft software such as Microsoft Office, which means less of a learning curve for your people, so they can get up and running quickly and focus on what’s most important. And because it is from Microsoft, it easily works with the systems your company already has implemented. By automating and streamlining financial, customer relationship and supply chain processes, Microsoft Dynamics brings together people, processes and technologies, increasing the productivity and effectiveness of your business, and helping you drive business success. Manufacturers and distributors seeking to optimize their forecasts try to include their supply-chain partners in the planning process. Yet according to one estimate, only 10% of manufacturers and distributors are using collaborative supply-chain planning systems. The reality is that while many suppliers work with key customers to build forecasts, few perform this exercise online. Why? Two reasons: First, many companies are reluctant to share data, and second, even when willing, few firms are able to commit the managerial and technological resources necessary to make this kind of collaborative planning work. Says one manufacturer, “You’re relying on your customer to have the same expertise that you do, and that’s not always the case.” Another obstacle to collaboration is technological integration (or its lack) among various players in the supply chain. Sooner or later, companies large and small— manufacturers, distributors, and retailers alike—will connect using true applicationto-application integration technologies such as XML and Microsoft’s .NET initiative. In the meantime, companies looking to collaborate regarding supply-chain needs and demand forecasts generally do so on a customized, one-on-one basis. One technology that is proving a boon to demand planning is the Web portal. Many progressive manufacturers and distributors are using portals to link their dealer and retailer networks for both product ordering and sales forecasting. For example, Fleetwood Enterprises, a leading maker of recreational vehicles and manufactured housing, is using a Web portal to upload dealer sales data to improve forecasting. For Fleetwood and others, the payoffs derived from a more effective demand planning system ripple through the supply chain. But for the individual manufacturer http://www.microsoft.com/dynamics/request_more_info.mspx?id=10178&wt.svl=10178

Table of Contents Feed for the Digital Edition of CRM - November 2008

CRM - November 2008 Contents Front Office Feedback Reality Check Customer Centricity The Tipping Point Working with the Years CRM on Twitter Virtual Spenders Contact Centers Chatting to Success The Complexity Chasm Required Reading Generational Spending: A Special Report Who, What, Where, When, Y The Slackers’ X-cellent Adventure The Boomer Boom The Matures Endure Boosting Productivity North of the Border Changing the Channel Invicta’s Thrill of Victory Secret of My Success Connect Re:Tooling Pint of View

CRM - November 2008

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