Teradata Demand Chain Management provide you with improved customer service levels, optimized inventory assortments and promotion management, fast ROI, and power and scalability. Learn more about what this newest version of DCM provides businesses. Includes screen shots and solution details. For more information, go to http://www.teradata.com/t/products-and-services/teradata-demand-chain/.
TRANSCRIPT
Teradata Demand Chain Management (DCM)
Release 4
Presenter
Presentation Notes
These slides provide a quick overview of our Demand Chain Management (DCM) solution. DCM is Teradata’s forecasting, replenishment and allocation solution.
Teradata Highlights
• Teradata Corporation – Launched October 1, 2007> Global Leader in Enterprise Data Warehousing
• Global presence and world-class customer list> Nearly 925 customers> More than 2,400 installations
• 6,400+ associates
Presenter
Presentation Notes
One quick slide on who Teradata is. Teradata is the world’s largest company solely focused on raising intelligence through data warehousing and business analytics and solutions. We at Teradata actually just recently celebrated our 30 year anniversary. Teradata was actually founded as a separate company back in 1979, it was acquired by NCR in 1991 and operated as a division of NCR and then Teradata was spun off as a separate company in October 2007. We have revenues of over $1.7 Billion, with over 900 customers of all sizes, and over 2000 implementations. We have over 6,000 associates and operate in over 60 countries around the world. We are the leader in data warehousing…and we focus on delivering solutions that leverage those strengths. One of those solutions is our Demand Chain Management solution.
Inputs• Location Sku: Time Series
Forecasts, Orders, Allocations• Individual location based
historical sales, future events• Inventory strategy, lead times,
trend
Results• Accurate demand forecast• Statistical and user defined
replenishment plans• Actionable allocation plan
Inputs• PO data, Partners, Orders,
ASN’s• Expected ship and arrival (ETA’s)• Anticipated events• Merchandise movements
End Results• Product in the right place at the
right time• Improved sales and turns• Customer satisfaction
How much of each item do I need to have at each Location and when?
Demand Pulls Product
ConsumerDCSource Carrier Store
Is the ordered product moving efficiently through the supply chain to the Locations,
according to plan and latest trends?
Product Flows Efficiently
The Demand Chain
Presenter
Presentation Notes
If you look at what we refer to as the demand chain, the traditional approach taken by retailers has been to push product into the supply chain by loading up the DCs and then hoping that the consumers show up to buy the product that gets pushed out to the stores. Instead what we think is a better approach and I think what you see a lot of leading retailers moving toward…is to better understand what the demand is at the lowest level, the store/sku level and then allow that demand signal to pull inventory through the supply chain. So as a retailer you are buying what’s selling rather than trying to sell what you have bought.
The Opportunity
Demand Chain Improvements!• After 40 years of investment in
technology to address Out-of-Stocks and improve inventory productivity we still have> 8% to 10% OOS, doubling during
promotions > Redundant and unproductive
inventories> Returns
•Retail Out of Stocks average 7.9% nationally, over 10% on promoted items
•A typical retailer loses 4% of sales due to OOS
•Retailers experience OOS rates between 6% and 10% for non-promoted products
• For promoted products, OOS rates of 18% to 24% are not uncommon
• In an AMR Research survey, almost 70% of shoppers surveyed said they would shop for OOS items at a competitor’s store or website“10% reduction in out-of-stocks is the
equivalent of adding a billion-dollar
brand.”
– Jake Barr, Proctor & Gamble
“Staying in-stock remains the top
revenue opportunity in North America.”
– VP Sales, Top 5 CP Company
Presenter
Presentation Notes
If you look at what continues to go on in the market there continues to be areas for improvement. Companies have been investing in technology in this area for years but there is continuing to be problems with out of stocks and excess inventory. Labor availability and productivity further complicate that. The recent economic conditions furthermore has added additional pressure on trying to maintain this balance.
SeasonalProfile & Intelligent
Profile Clustering
DemandForecasting
PromotionsManagement
AutomatedReplenishment
Time PhasedReplenishment
Allocation
Contribution
Intelligent Product Introduction
CapacityPlanning
Teradata Enterprise Data Warehouse Industry Logical Data Models
Teradata DemandChain Management
Financial Management Demand and Supply Chain Solutions Customer
Management
Teradata Solutions
Demand Chain Management
Presenter
Presentation Notes
Demand Chain Management is our forecasting, replenishment and allocation solution. It is an integrated solution but it is also modular, the solution consists of 9 modules…so as a result we can address certain business problems without someone having to buy the entire solution. Also the solution is optimized for Teradata which enables us to scale and generate the accuracy at the store sku level that we have seen at our customers.
The Value Of Teradata DCM
• Our extensive experience in implementing demand and supply chain solutions for leading global retailers, validate our ability to> Optimize regular and promotional
store/SKU forecast and order accuracy> Improve promotional planning, and > Align inventory investment with
customer demand
• This results in > Sales increases ranging from 2% - 8%> Inventory turns increases ranging
from 20% - 40%> Improved labor productivity and execution
• This delivers a substantial net earnings increase and payback in less than 12 months after implementation
Presenter
Presentation Notes
This slide gives you an overview of the benefits that our customers have realized. They have seen up to an 8% increase in sales by increasing service levels on the fast movers and reducing out-of-stocks. They have seen up to a 40% improvement in inventory productivity by reducing their safety stock investment in non-performing items. And finally, they have seen a significant improvement in associate productivity, given the automation built into the system.
Teradata Demand Chain Management
DCM Modules• Contribution
Outputs• Ranking of items based on sales dollars, sales units and gross margin dollars
ItemContribution
DCM Modules• Seasonal Profile• Demand
Forecasting• Promotions Mgt• Intelligent Prod
Intro
Outputs• Regular and
Promotional sku location level and aggregate forecasts
• Automated Seasonal Profiles
• Multiple time horizons from daily to 65 weeks
Regular and Promotional
Demand Forecast
DCM Modules• Auto and Time
Phased Replenishment
• Allocation
Outputs• Up to 65 week order
forecast• Multiple time
horizons• Forecast based
allocation with various methods including contribution
Replenishment and Allocation
Point-in-Time and Time Phased
DCM Module• Capacity Planning
Outputs• Shifting of orders
to account for available DC capacity
Capacity Planning
The Solution
Presenter
Presentation Notes
This is really an overview of the solution on one slide, and I will walk you through this and then we will spend some time later drilling down into some of the components. We start with understanding the item contribution at the store sku level, and we can look at it in terms of sales or gross margin. We will talk about this more but this is key in determining the amount of safety stock that you should have for any particular item. We next can generate both a regular and promotional forecast, taking into account seasonal impacts and promotional event effects on demand. Next we have both point in time and time phased replenishment along with an integrated allocation solution. And finally we have Capacity Planning which helps identify where spikes in demand will cause issues in terms of the volume that can be handled by the Distribution Centers. So that gives you a quick overview of the solution on a single slide and we will also drill down into some of these areas next.
The Solution
Teradata Demand Chain Management• Dynamic ranking of Product performance at any level of the product or location hierarchy• % Ranking according to contribution to sales units, sales dollars and margin dollars• As with everything else in DCM, contribution coding is done “bottom-up” at the Store/SKU
level!> This enables greater precision (and ROI) in inventory investments> Enables localised assortment
• Solution used to identify importance to the business• Automatically picks up Life Cycle changes
Contribution Code
% Contribution
Customer Service Level
Actual Desired
A Top 60% 79% 99%
B Next 20% 83% 97%
C Next 15% 95% 95%
D Next 4% 100% 93%
E Bottom 1% 100% 91%
DCM Modules• Contribution
Outputs• Ranking of items based
on sales dollars, sales units and gross margin dollars
ItemContribution
Presenter
Presentation Notes
Contribution is an analysis tool that provides decision-makers with views of product performance all along the product and location hierarchies. The top contributors are given an “A” contribution code and the poorest performers are given an “E” contribution code. By identifying the problem areas or non-performing items, changes can be made to the assortment to better fit demand. This classification is then used throughout the application to drive other decisions that have the net effect of shifting inventory investments to items that have a big impact on the bottom line and away from products that don’t. This then ends up having a big impact on the ROI driven by the solution.
Teradata Demand Chain Management• Automatically identifies products and locations that demonstrate similar
seasonal selling patterns without hierarchical dependencies• Provides a forecast based upon actual consumer
demand, accounting for lost sales due to stock outs• Use of multiple algorithms in parallel to drive
greater forecast accuracy in a bottoms up approach• Ability to forecast future promotions based upon
past promotions’ results considering various promotional drivers
• Simulation capability optimizes forecasts and orders• Provides the ability to intelligently match new SKUs
to existing SKUs in order to seed an initial forecast for the new SKU
Promotional sku location level and aggregate forecasts
• Automated Seasonal Profiles
• Multiple time horizons from daily to 65 weeks
Regular and Promotional
Demand Forecast
Presenter
Presentation Notes
Next we will look at the key components to coming up with the forecast. Seasonal Profile and Intelligent Clustering A very important key to getting an accurate forecast is understanding the impact of seasonality. Every product, doesn’t matter what it is, has a seasonal impact, and if you don’t get that piece right then you can’t produce an accurate forecast. With DCM we use historical POS data to drive better seasonal models. With the automatic profile tuning capabilities the solution automatically tunes the profiles over the course of the year, making them better. With the intelligent profile clustering capabilities the solution automatically identifies products and locations that demonstrate similar seasonal selling patterns without any hierarchical dependency…we are able to generate a profile at any level of the hierarchy and we are not constrained by the hierarchy for these groupings. As a result this significantly reduces the number of profiles that have to be managed, provides more accurate seasonal models, and drives a more accurate forecast. Demand Forecasting Next is demand forecasting. The key about this is that it is done at a store/sku level. We have a variety of models (3, 6, 12, 26, and 52 week adaptive and 52 week exponential smoothing) that are used to get the best result. We run them in parallel…pick the best one. We then use that model to generate the next forecast for that item. Again, the scalability with Teradata gives us a big advantage because we can forecast at the store sku level. We are able to forecast for multiple time horizons. We also have special algorithms for slow movers which is a significant problem in Retail in that there is a significant amount of slow moving items. Promotions Management With Promotions Management we maintain a detailed history of previous promotions. The Promotions Management module takes an array of variables into account, including: Type of media or combination of media, including television, radio, fliers, or newspapers Length of the promotion Discount percent offered on the merchandise; for example, the effect of a 25% off promotion vs. 50%, or $.50 vs. $1.00 off Retail dollar value of the merchandise; for example, two articles in the same category at the same discount percent but at different retail prices, and also takes into account the… Contribution ranking of the SKU in each location After weighing all the factors that can affect the promotion, then Promotions Management automatically develops a sales multiplier and provides you with everything you need to accurately forecast your merchandise requirements and sales results by individual SKU at each store location. The tool also allows you to manually override or modify the recommended uplift, if needed. The Promotions Management module also evaluates the promotion’s sales results by item and location, then records those results for future reference…and as your promotions evolve, Promotions Management uses these historical records to automatically tailor future forecasts. Intelligent Product Introduction Our newest module which will be available in our next release coming out this quarter is Intelligent Product Introduction. Companies are constantly introducing large numbers of new Items to their product assortments in efforts to fulfill the changing customer demands in the chase to remain competitive and grow their sales. While the new product introductions are designed to drive sales and even better--new customers, they also represent a huge challenge for retailers and their manufacturing partners as they try to determine what the demand for the new product is going to be over the initial launch. Over estimate demand and the retailer is stuck with excess inventory on a new and potentially failed product. Under estimate, and it results in a missed opportunity to increase sales, build customer loyalty and attract new customers. Previous measures of “mirroring” another item by relying on knowledge within the company to match up new forecasts with old forecasts may not be enough to deliver the right result where the rubber meets the road—every store, every item, every day is where customers vote with their shopping dollars. To improve results in this long time challenge, Teradata has developed a new module in the Demand Chain Management (DCM) solution called Intelligent Product Introduction. This module builds on the key DCM capabilities by providing an intelligent tool that is used to determine the best reference Item or combination of Items at the store level to borrow historical sales and quick start forecasts supporting the new product introduction. IPI utilizes multiple, user defined, primary and secondary attributes for these products to identify “Best Fit” candidates from product assortments to deliver an accurate forecast start. Items are searched and scored automatically to identify the best matches and users are presented with the results and “Fit” calculations. In addition, orphan logic is applied to stores where products were not previously carried setting up matches and establishing a bottoms-up expectation of customer demand. These values can be executed automatically or reviewed and modified by users deep in tribal knowledge, to manage the forecasts to specific results. In either case, forecasts are executed and managed automatically in the replenishment or allocation processes to ensure the right quantity at the right place at the right time is delivered to support the new product’s introduction, minimizing the occurrences of over and under stocked conditions. This is coupled with the DCM Exception monitor to highlight potential mismatches for further action early in the launch period allowing the business to react and improve results. Criteria for matching that can be weighted includes: Classification level, Vendor, Brand, Size, Color, Cost, Season, ARS range and Description.
The Solution
Teradata Demand Chain Management• Provides both point-in-time and time phased replenishment• Business policies transform the sales forecasts into replenishment orders, over
multiple time horizons (daily to 65 weeks)• Time Phased Orders allow for Store-DC Synchronization• Orders built at store and DC, approve or modify store
orders to DC for execution• User defined service levels, safety stock considers,
volatility, popularity, rates of sale, forecast accuracy• Supports a variety of Allocation methods and types
including forecast driven• Integrated Replenishment and Allocation supports
hold ‘n flow strategy for distribution
DCM Modules• Auto and Time Phased
Replenishment• Time Phased
Replenishment
Outputs• Up to 65 week order
forecast• Multiple time horizons• Forecast based
allocation with various methods including contribution
Replenishment and Allocation
Point-in-Time and Time Phased
Presenter
Presentation Notes
Replenishment We believe that a particularly big strength of our solution is in the area of replenishment. The solution supports both point-in-time replenishment which is focused on determining what the next order should be and it provides time-phased replenishment which is determining the next series of orders into the future up to 65 weeks. The primary output are suggested order quantities that can be fed into their PO system. Through the use of replenishment policies, it is possible to define several of the variables that impact suggested order quantities, including lead time, service level, planned sales days, pack size, and min and max information. These policies can be defined at any level of the hierarchy, right down the store. We also have simulation functionality that allows you to look at what-if scenarios, such as what-if my lead time changes from 7 days to 14 days. If you like the results of the simulation then you can put the policies into production. Time Phased Replenishment also offers built-in benefits such as eliminating the need to model non-linear (lumpy) distribution center (DC) demand. Time Phased Replenishment, instead, rolls up forecasted store orders to create the DC demand that is synchronized with the store demand. Allocation Our Allocation module is really an extension of replenishment and can leverage the same forecast and historical data. It supports making the allocation prior to the purchase order being issued, at the time of the PO being issued, and also when you have inventory already at the DC’s. It supports a variety of allocation methods. A key advantage of our solution is that we provide integrated forecasting, replenishment, and allocation. What is key about that is that we are seeing retailers interested in integrating these processes and they need tools to help them operate that way.
The Solution
Teradata Demand Chain Management• Calculates DC capacity utilizations and adjustments needed to stay within capacity and support demand• Each week, corporate roll ups at cube, case and pallet are done for all order forecasts, for all locations,
for a 65 week planning horizon• Can include the results of a Simulation from the Replenishment module
The Capacity Planning module supports a process for forecasting throughput and holding capacities at the DC and the stores. Its purpose is to look forward three to nine months ahead, to times of peak capacity and higher inventory demand periods, and judge capacity needs versus restraints at designated Distribution Centers. This assessment is based on inbound capacities…and also holding and outbound shipping capacities. The module highlights times when expected receipts into the DC and/or shipments to the stores will exceed the physical capacity of the facilities and resources available. So it allows you to be proactive and address the problem rather than waiting for the problem to happen when it is too late. (The module does not attempt to reschedule orders but highlights areas that require user intervention.)
What Is Unique About DCM?
• Provides a forecast based upon actual consumer demand, accounting for lost sales due to stock outs
• Use of multiple algorithms in parallel to drive greater forecast accuracy in a bottoms up approach
• Automated Seasonal Profiling identifies products and locations that demonstrate similar seasonal selling patterns without hierarchical dependencies
• Ability to forecast future promotions based upon past promotions’ results
• Dynamic ranking of product performance at any level of the product or location hierarchy, enables alignment between inventory investment and return
• Time phased replenishment that provides synchronization of inventory throughout the supply chain and supports collaboration with vendors
• Integrated Forecasting, Replenishment and Allocation solution• Scalability which enables a forecast to be calculated for every sku location
weekly or daily and rolled up at any level of product/location hierarchy...resulting in improved accuracy
Presenter
Presentation Notes
This is just a summary slide of what we see as the primary strengths of the solution. Just to kind of recap, we provide and accurate forecast that is based on what the consumer is voting on with their shopping dollar. We use multiple algorithms to make sure we get the best model. We do a good job of isolating what the seasonal impacts are which is critical to getting an accurate forecast. We provide promotional forecasting. We leverage the dynamic ranking of products to make sure that the right inventory levels are being maintained. Time phase replenishment enables the synchronization of inventory throughout the supply chain. The forecasting, replenishment and allocation solutions are integrated which supports a hold-n-flow capability, and finally we can scale to handle any size retailer which drives accuracy and we have references in production to back that up.
Teradata DCM Release 4
Dashboard/Workbench• Improved Usability through coherent navigation –
less clicks• Change location/category selection without leaving
screen• View details on Exception or SOQ without leaving
screen
• Provide meaningful information and alerts with minimal navigation
• Focus alerts on actionable information• Alerts to tell user what to look at versus simply
dumping information
• Pre-defined layouts, flow and navigation by key roles
• Flexibility for UI configuration• Maximum flexibility for configuring DCM Customer
specific views• Role specific views – can be as simple or complex as
desired• Define multiple pages for different processes/views• User preference to
> include/exclude portlets> define same portlet multiple times for different
scopes of data
Presenter
Presentation Notes
One of the major changes in our next release coming out this quarter is that we feel we have greatly improved the user interface, so I included just a few slides at the end here to give you a sense of what that will look like. Admittedly, we believe we really drive strong results in terms of forecast accuracy, but one of our biggest weaknesses has been the user interface but with this next release we believe we have turned that weakness into a strength. We have used user experience architects to help us design the new user interface. Also we have tried to make sure that whatever we build is customizable and flexible. We give the flexibility to the users and implementation team through a tool called a common grid control. So if you look at this screen. This is a totally different look and feel from our previous release. We are now able to provide a dashboard where each one of these little screens is a portlet. In this particular screen we have an exceptions portlet on the upper left corner. There is a Key Performance Indicators portlet on the upper right. There is an order summary on the lower left corner, and a Contribution Breakdown on the lower right corner. This is just an example of what it could look like but you could actually change the number of portlets or different information in the portlets. We are trying to improve usability so we are trying to limit the number of clicks that are required by the user to extract information, and we are trying to provide the information that is actionable for the user.
Teradata DCM Release 4
KPI and Contribution Details • YTD, MTD, Week comparison• Actual, Plan and Forecast• Multiple Graph Types• Configurable Settings
• KPI Metrics by Contribution• Breakdown by Sales $, Units, GM $
Presenter
Presentation Notes
This is showing you a drill down view from the summary view. So if you clicked on the go to details tab on the summary it takes you to this screen where you are able to see more detailed information. Again we are not looking at BI type of KPI’s, instead we are looking at more operational KPI’s that can be impacted by DCM. You can actually select specific KPI’s and it will plot it on the graph to easily allow you to make comparisons. So it is meant to give you very actionable insight into how the business is doing. You have flexibility in terms of looking at the data via a graph or just the tabular view itself like in Excel. So we are making the information available rather than you having to come up with separate reports. On the right hand side is a contribution breakdown, this shows a category view to see how the different categories are performing in terms of contribution, and you can drill down into sub-categories, and you can drill in to the different contribution code classes. It gives you a very good indication on whether you have your inventory in the right type of sku’s or whether your inventory is being occupied by the lower performing skus.
• Available for Executives, H.O. and Store/DC Managers to review Exceptions at appropriate Location/Classification level from Exception Portlet in DCM Workbench.
• Exception Summary panel displays each Exception Type: # SKU/Locations, trend arrows and sparklines for selected Location/Classification
• User has ability to define which Exception Types to display and including optional trend arrows and sparklines in Exceptions Setting screen.
• Ability to drill into the Exception Detail screen for a specific Exception Type to display SKU/Location detail grid with hyperlink to an Exception Popup Graph
• Exception Detail screen allows user to change the Location/Classification and Exception Type to view.
Teradata DCM Release 4
Exception Details
Presenter
Presentation Notes
Again this is a drill down from the summary view to the exceptions, and then you can drill down into different types of exceptions. For example, if you want to look at potential out-of-stocks you can click on that row and it gives you details about a potential out of stock. The users can also chose what types of exceptions they would like to see details on. An important addition is that for each exception we are providing a daily trend which is really important because the planners are looking for some sort of trend information to determine if they need to look at the exception more seriously, so they want to know if it is trending up or down or if it is constant within a certain tolerance. Also we give you different breakdowns such as how many of your exceptions are on promotion or not. The bottom area is our common grid which is common across a lot of the portlets and a lot of the workflows, that is something we have spent a lot of time on to make sure it satisfies the business requirements. So the bottom gives you more details without having to go to another page. As you click on specific types of exceptions, the screen gives you further details on where the exceptions are occurring with all the relevant metrics. And even from this screen you can change the classifications or stores you are looking at without having to go back to the main dashboard.
