As mentioned in our first blog article, we are going to cover a variety of topics that supply chain professionals, operations leads and plant managers are faced with on a daily and weekly basis. Our second blog article was focused on delivering value to customers/suppliers by eliminating internal costs. In this article, we’ll discuss demand planning and forecasting.
It’s imperative in today’s fast-paced environment to have forecast solutions that are streamlined and effective. We all know that catastrophic events can turn your world upside down and that the ability to respond quickly is critical. Luckily, due to software advances, itelligence offers attractive low-cost options with proven return on investment, and we’re already seeing great results reported by companies that have been using our solutions since 2014.
Forecasting challenges to be addressed could include any of the following:
- Effectively implement forecast changes in a timely manner
- Notating and analyzing forecast changes
- Managing promotions and/or manual adjustments
- Keeping forecasted materials master data updated
- Improving forecasting accuracy
Working with our customers, we often see a disconnect between Sales, Finance and the Production teams in regard to arriving at a consensus Sales and Operations (S&OP) Plan. Let’s spend a few moments exploring the differences in these teams, and the impact of each team on the overall forecast. This may sound very similar to your own organization:
- The Sales team is typically aligned to a group of products and normally responsible for a particular region(s).
- Bottom line is they are GREAT at what they do, drumming up sales for the up-and-coming products.
- In order to gain this market insight, forecasting tools need to make data collection activity simple and straight-forward for Sales Professionals, since these folks tend not to be technology experts.
- Sales people require flexibility and visibility to change a previously submitted forecast(s) for a production line, region or time period.
- The finance team regularly would like to view the forecast in terms of financials vs. number of sales units or quantity.
- It’s important to see the impact of forecast accuracy and inventory build to understand the overall inventory dollars commitment vs. sales forecasts over a certain period of time.
- Production teams need to have information down to the SKU level for manufacture or purchase.
- The main goal of production personnel is to ensure that the right amount of inventory is available at the right time for customer fulfillment.
All of the departments have varying underlying forecast goals and strategies. This often causes a situation where one or many of the team members are left to create manual spreadsheets or data extractions to accommodate internal S&OP planning. This practice of working outside of the SAP ERP package is considered non-value add and something that requires consistent replication month over month.
As an SAP partner, we recognize the need for an advanced S&OP Planning Tool – one that allows for easy manipulation, collective input and intuitive analysis. SAP ECC and S/4HANA provide basic forecasting capability, but tools like GIB Disposition Cockpit Forecasting (DCF) and SAP Integrated Business Planning (IBP) offer much more functionality and flexibility, at different price points.
These are the benefits our customers receive by implementing the GIB DCF forecasting module:
- Ability to utilize 18 statistical models using historical data to automatically suggest the best forecast model based on weighted factors.
- Standard SAP only allows 7 forecast models.
- Capability to simulate a selection of different forecast models and view forecast impacts.
- Standard SAP offers very limited forecast simulation with poor visualization.
- Option to transfer forecast requirements in batch or one at a time, providing more flexibility for last-minute adjustments.
- Central Hub – use the cockpit as a central launch point into commonly used transactions from the planning sheet.
- Simple way to pull in sales history from Sales Information System (SIS) structure, intranet, consumption data tables or BW source.
- Provides intuitive graphical display for quick data analysis of forecast accuracy vs. real-time sales order history.
- Limited IT know-how is needed; no configuration.
- Finally the GIB DCF Forecasting solution resides directly in your SAP ECC or SAP S/4HANA System.
- GIB uses your SAP master data.
- Data replication is not needed.
- Additional hardware is unnecessary.
The GIB DCF Forecasting module can be implemented in 6-12 weeks and offers a great ROI as an alternative solution to other SAP forecasting products or non-SAP applications.