forecasting process sales and operation planning
TRANSCRIPT
Forecasting ProcessForecasting ProcessSales and Operation PlanningSales and Operation Planning
AgendaAgenda
• Objectives of S&OP process
• Business Process Flow & status
• Forecasting Process
• S&OP Process
Objective of S&OP processObjective of S&OP process
• Accurate consensus projections of future business results
• Accurate information to customers, source point, and internal
organizations
• Coordinated action plans to ensure demand and supply are aligned
• Execution on business process integration model to ensure alignment
between business management, innovation management, customer
management & SC management
Business Process FlowBusiness Process FlowStrategic Plan
NO
Annual Plan
Demand Plan
Import Plan
Sales PlanFinancial Plan
Detail Operation
Delivery
Sales & Operation Planning
YES
Forecasting ProcessForecasting Process
Forecast ObjectiveForecast Objective
• GET ONE SET of figure that reflect real demand in market
• Improve forecast accuracy
• Reduce cost (w/o, WH, inventory…)
• Improve stock availability (including promotion, NPD)
• Improve Customer Service
Supply chain flowSupply chain flow
Sourced point
Dumex VN Distributors
Sub-distributors
Primary sales
In-market sales
Stock transferingCurrent
Trade
Unconstrained demand with factors from trade and internal activities
14 days
14 days
28 daysincluding GIT
Ordering
Forecast Process flowForecast Process flowHistory Sales
NO
Take out promotion,pipeline, OOS
Cleaned History
Baseline forecast
Pre-Demand Plan
Consensus Unconstraint Demand
Level, Trend
Forecast Meeting
YES
NPD plan (pipeline, running rate,
launch date, cannibalization).
Promotion Plan (incremental, period,
cannibalization)
Actual Sales
Forecast accuracy improvement
Market growth Company market sizeCompany positioning
strategy
Competitor activities
Corrected Forecast + Promotion
History(Including a Promotion)
Past Future
Corrected History Baseline Forecast
Cleaned Historical DataCleaned Historical Data
Baseline + Incremental
Units
Time
Statistical forecast
Sales lost in anticipation of promotion
Sales lost because of stock buildduring promotion
Incremental sales gain during promotion
=-
NetGain
Promotions – Promotions – before and after period should be taken into considerationbefore and after period should be taken into consideration
Forecasting data & ownershipForecasting data & ownership
Forecast data Ownership M0 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M13
Baseline Planning Manager firmed
Promotion MKT/Sales Manager firmed
NPD MKT Manager firmed
Pre Demand Plan Planning Manager firmed
Consensus Unconstraint Demand
Forecast Meeting Members Firmed
Process Planning Manager
Forecast data: Sales in market (IMS), by SKUs level, by Distributor & Nationwide with UOM in carton, ton, VND • Sales is ownership of forecast data M2-M4 • Marketing is ownership of forecast data M5-M13• Supply Chain is ownership on forecasting process
Forecasting MeetingForecasting MeetingObjectives:Primary: A forum to get consensus on one set of figures that reflects real demand in the market which is unlimited by supply constraint and independent from target.Others:• A forum to review previous month forecast error, causes of exception and key lessons learned for continued future forecast improvement.
Schedule Weds of W2Rules Review Pre-demand plan and do homework before the meeting Change only if significant Ensure to reflect all promotion activities timely in the plan. Own demand plan. Own forecast accuracy.
Attendees Trade Marketing Manager National Sales Director Planning Manager / Customer Service Manager SC Director MKT Manager
OutputPrimary: 12 months agreed unconstrained demand plan report for supply plan and financial review. Agreed pipeline, quantity & timing for product launches Input for S&OP
InputPrimary: Pre-demand Plan from Demand Planning NPD Volume Forecast TemplateOthers Operation Plan from Trade Marketing/Marketing Sales Bottom Up from channels Last Month Forecast Accuracy Report
Process Owner: Supply Chain Director
Roles Expert adviser on trade issues, decision making Owner of total demand plan to achieve the company target Chairman of meeting/Expert adviser on statistical model Owner of process Owner of promotion/NPD in related brands
Meeting Owner: Planning Manager
Sales & Operation Planning ProcessSales & Operation Planning Process(S&OP)(S&OP)
“S&OP” is a Process lead by Senior Management that, on a monthly basis, evaluates revised, time-phased projections for supply, demand, and the resulting financials.”
What is S&OP?What is S&OP?
S&OP OverviewS&OP Overview
Outcomes
• Planning processes are linked and synchronized• All functions have aligned incentives• Operations capacity is efficiently used• Operations has flexibility to minimize cost of goods sold• Reduced uncertainty
• Higher asset utilization with appropriate capacity• Lower operating costs due to better communication• Improved customer service• Higher revenue• Opportunities identified• Improved stock turns
Demand Supply
Customer Actions
Key AccountPlanning
TradePromotions
ConsumerPromotions
CompetitorActions
ForecastsOptions
Lead Times
Mfg.Capacity
Constraints Scheduling
CustomerServiceGoals
DistributionCapacity
Constraints
Risks & Costs
Flexibility
Anticipation
Risks & Costs
Stock & Funding Policies
Sales and Operations Planning is a process that balances demand plans and supply constraints proactively.
Objectives:Primary: Ensure planned supply meets Demand plan as much as possible Agree decision when supply can not meet demand Discuss company stock & supply operation issue Review & Ensure target achievement
Attendees MD National Sales Director SC Director Planning Manager / Customer Service Manager MKT Director, Marketing Manager Financial Director
OutputPrimary: Agreed demand, supply, capacity, inventory actions Confirmation on gap (if any) between current plan and target for action plan Agreed sales plan (Sales in market) Agreed financial plan (Sales to market)
InputPrimary: Confirmed supply meet demand plan. Propose option to meet demand plan Propose capital Expenditure investment plan Confirmed supply response to short notice ProposalOthers NPD & Promotion Plan Stock situation
Schedule Fri of Week 3 Time horizon: next 12 months. Focus M2-M6
Rules • Circulate agenda before the meeting.• Use standard presentation format.• Highlight big issues.• Mandatory meeting (supported by the Board).• Review actions from previous meeting.• Agenda owner leads the topic of discussion• Minute of action written by action person
Process Owner: MD
Roles Chairman/ensure actions are reach on demand and supply issues Provide sales insight & agree on proposed plan Meeting owner & facilitator
Provide brand development plan & agree on proposed plan Provide agreement/comments on financial aspects on issues discussed
Meeting Owner: SC Director
S&OP MeetingS&OP Meeting