of the desired stock levels and the finance department in terms of budgets and prof- itability. Sales wants flexibility, marketing wants the rapid launch of new products, production strives for efficiency, finance wants cost reductions and supply chain wants to receive more accurate forecasts...
Time to get analytical!
In order to align the levels of available stock and the production planning with demand, it is necessary to have accurate product-level demand forecasts that are based on reliable data. Jorg van Geest, Center of Excellence Demand & Inventory Management Europe at Nike, explains that his company introduces four col- lections every year, each containing lots of new products. “This necessitates a creative approach to forecasting. His- torical data is not always relevant. We’re currently in the midst of a pilot project around the issue of ranking, for which we’ve enlisted the help of merchandisers.” Patrick van Loon, Business Solutions Manager Supply Chain Intelligence at
(NXP SEMICONDUCTORS): “S&OP forces you to work as a team.”
SAS Nederland, suggests that analytical tools play a key role, not only by improv- ing the forecast itself, but more particu- larly by providing insights into the impact any instinctive adjustments would have on the forecast. This results in decisions that are well-founded and, perhaps even more importantly, consistent over time. Several participants are trying to find ways of heightening the involvement of their sales and marketing departments in forecasting demand. Would a bonus system help to improve the reliability of a forecast, perhaps? According to Chase, it is particularly important to gain insights into the impact of demand forecasting on customer service levels, inventory costs, turnover and profitability. “You can include ‘Improving forecast accuracy’ as an objective in the bonus system, but don’t attach any measurable goals to it! Instead, it’s better to shift into ‘analytical mode’ by using statistical data, advanced models and scenarios – introduce more intelli- gence into the forecast and strive for opti- mal user-friendliness. This means you’ll be generating and supplying precise fore- casts which people will only be allowed to adjust if they can influence the sales vol- ume by demand shaping.” This will ulti- mately result in improvements when it comes to setting strategic objectives such as market growth and profitability. Aad Ramondt, European Planning & Distribution Director at InterfaceFLOR, sees an important role reserved for sce-
narios. “Scenario planning is a powerful tool for achieving flexible planning in the multi-disciplinary S&OP process and for ensuring that decisions are considered from all angles. It is a way of examining ‘what if’ situations quickly and accurately. You might also have to be able to explain how quickly you can increase capacity, for instance.” Thanks to powerful tools
FRANK SCHAAPVELD (MEDTRONIC):
“The stage of S&OP maturity varies per division.”