Managing Automation - December 2008 - (Page 25)

some at math because, let’s face it, there’s software and algorithms involved,” says John Vaughn, director of industry solutions in the consulting practice at Patni Computer Systems. “But you also need people who understand demand planning collaboration and who also understand and can communicate with the sales force.” Manufacturers say the difficulty of finding the right people with the right skills can easily derail or at least delay a demand planning improvement initiative. “It’s hard to find people who really know how to forecast demand,” says Jason Bates, supply chain manager at Quality Bicycle Products. “It took us more time than we expected to put a solid team together.” In fact, Bates says, planners who were familiar with QBP’s old, manual, min/max style of forecasting took about a year to truly catch on to the new style of statistical forecasting and time phase replenishment. People who were new to the demand planning organization, however, took only three months to catch on, he says. Training and certification programs offered by organizations such as APICS and the Institute of Business Forecasting and Planning can help manufacturers with demand planning skills development. IDEA 5 DON’T OBSESS OVER THE MATH. Fundamentally, experts say, demand planning is about having the right collaborative processes in place, the right organizational structure, and good visibility into the demand signals generated by your customers. And it’s about being able to respond quickly on the production side when demand signals fluctuate. While demand planning algorithms embedded in software tools are part of the answer, manufacturers shouldn’t fall into the trap of thinking the math matters more than the rest. “A lot of people are trying to solve a problem with math that can’t be solved with math alone,” says Simon Ellis, supply chain practice director at IDC Manufacturing Insights. “At the end of the day, you can come up with a new forecasting algorithm that’s slightly better than the one you were using yesterday, but that’s not going to be what improves service levels or reduces inventory. For that you need a comprehensive approach and clear visibility all the way down the supply chain.” gence collected by the company’s sales team with historical demand data to produce a forecast. The company is hoping the new approach will allow it to reduce inventory levels, which typically run $25 million to $30 million, and to improve instock status, Bates says. Of course, it’s not all bad news for manufacturers attempting to get better demand planning results more consistently. Although complexity is certainly on the rise, new tools are beginning to appear that can help manufacturers consume, manage, and analyze the mountains of POS, promotions, and other demand signal information that are pouring in. Between April and July of this year, for example, Oracle, Netezza Corp., and Teradata Corp. all announced plans to roll out demand signal repositories, essentially dedicated data managingautomation.com warehouses that serve as a single, highperformance point for the collection and RELATED ARTICLES: Terra Technology: Removing Supply real-time analysis of demand data. Chain Guesswork Perhaps more significantly, at many www.managingautomation.com/guesswork manufacturing companies, the recent Oracle Targets CPG with New Demand and dramatic increase in focus on sales Planning App and operations planning (S&OP) has www.managingautomation.com/cpg placed a greater premium on accurate Caught Between Supply and Demand demand forecasts. As top managers have www.managingautomation.com/supplydemand come to realize that S&OP doesn’t work Sales and Operations Planning: The New well when there’s a lack of confidence in Crystal Ball www.managingautomation.com/sop2 demand plans, they’ve become more willing to invest in improving demand Islands of Automation www.managingautomation.com/trans5 planning processes and tools, says Tom Wallace, an S&OP consultant and auCOMPANIES MENTIONED: thor of Sales & Operations Planning: The i2 Technologies How-to Handbook. www.managingautomation.com/i2 “In some ways, the rise of S&OP has Infor made the forecasting job less onerous bewww.managingautomation.com/infor4 cause now everybody can see that there’s JDA Software a point to it,” Wallace says. “Before, everywww.managingautomation.com/jda body would jump through all of these Kinaxis www.managingautomation.com/kinaxis hoops to come up with a forecast. Then operations would second-guess it or igLogility www.managingautomation.com/logility nore it. When S&OP operates properly, Netezza all of that goes away because you end www.managingautomation.com/netezza up with a single forecast that is manageOptiant Inc. ment-authorized.” www.managingautomation.com/optiant It would certainly be nice if you could Oracle instantly sense demand, drive cycle www.managingautomation.com/oracle3 times and inventor y to zero, and just SAP ship to incoming orders. But for most www.managingautomation.com/sap3 manufacturers operating in an increasSmart Software ingly global marketplace, that’s just not www.managingautomation.com/smartsoftware practical. Some level of finished-goods Symphony Metreo Inc. inventor y is necessar y to meet even www.managingautomation.com/symphony minimal customer-service levels. Teradata That means there will always be a www.managingautomation.com/teradata need for accurate, predictable demand Terra Technology forecasts, even as the manufacturing enwww.managingautomation.com/terra vironment becomes more complex. I maonline 25 December 2008 http://www.managingautomation.com http://www.managingautomation.com/guesswork http://www.managingautomation.com/cpg http://www.managingautomation.com/supplydemand http://www.managingautomation.com/sop2 http://www.managingautomation.com/trans5 http://www.managingautomation.com/i2 http://www.managingautomation.com/infor4 http://www.managingautomation.com/jda http://www.managingautomation.com/kinaxis http://www.managingautomation.com/logility http://www.managingautomation.com/netezza http://www.managingautomation.com/optiant http://www.managingautomation.com/oracle3 http://www.managingautomation.com/sap3 http://www.managingautomation.com/smartsoftware http://www.managingautomation.com/symphony http://www.managingautomation.com/teradata http://www.managingautomation.com/terra

Table of Contents Feed for the Digital Edition of Managing Automation - December 2008

Managing Automation - December 2008 Contents Take 1 Business Objects Chief Says Union with SAP Meets Objectives After One Year Yes, Emerson, Too, Is in the MES Market Infor Chief Puts Off IPO, Restarts Buying Plans Kronos Now Tracks Shop Floor Machines IQMS Rolls Out User Interace, Other Upgrades Notes Five Ideas for Demand Planning Building on the SOA Blueprint Innovation Now A Team Effort Lean %2B Technology = LEAN^2 Finding Flaws Before They Spread Product Scan Advertiser Index Next

Managing Automation - December 2008

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