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About Demand Planning LLC

Demand Planning LLC, based in Boston MA, is a consulting boutique comprised of seasoned experts with real-world supply chain experience and subject-matter expertise in demand forecasting, S&OP, Customer planning, and supply chain strategy.

We provide process and solutions consulting, as well as customized training across a variety of industries.

Through our knowledge portal DemandPlanning.Net, we offer a full menu of training programs through in-person and online courses, as well as a variety of informational articles, downloadable calculation templates, and a unique Demand Planning discussion forum.

  • 01Jan

    As we are about to ring in the New Year, here is a moment to contemplate on what we have seen in 2012 and what looks like in 2013.

    It appears 2013 will be the year to shift major paradigms!

    Since I am not psychic, I am just looking at trends to see if they extend, fold or just just go no where!!

    1. The Big Data Bandwagon will get even bigger!

    Just like outsourcing was the buzzword in 2002, Big data is the current buzzword to attract venture funds, IT investments and even for job seekers to find a higher-paying job! Big Data buzz will get even bigger in 2013!

    2. Integrated Business Planning will take over from S&OP!

    More c-Level managers will start to look for a process that can effectively leverage Big Data above to make decisions based on predictive analytics! Only the thought leadership will happen in 2013. The technology and the software field is wide open with no identifiable players ready to facilitate IBP.

    3. Outsourcing Demand Planning Best practices will become more prevalent

    Companies in SMB will look to outsource their demand planning efforts, not necessarily eliminate demand planners, but the process to achieve consistency and sustainability in demand planning!

    4. We will see much higher visibility of Demand Management!

    The entire process to demand shape, sense, plan and manage demand will achieve higher visibility in Corporate America. People with such skills along with business experience will be most sought after for lucrative positions through out the world!

    5. User-unfriendly technologies will suffer a bigger blow in 2013!

    Software technologies that are not user-centric or user-focused will find themselves losing market share in 2013 with potential casualties including SAP and Apple (yes – Apple Computer has joined that camp in the post-Jobs era)!

    Let us prepare for 2013 and do the right thing and make the right moves!

    All of us at Demand Planning Net wish you a happy and prosperous New Year 2013! Enjoy a fun and safe New Year’s Eve!

    Sincerely,
    Mark Chockalingam
    Demand Planning LLC

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  • 20Jul

    Is there a single KPI for the entire organization? Possibly, two metrics qualify as good KPIs.

    1. Net Profit = Total Income minus all Expenses. This is a Dollar number and ignores the scale. It can be measured with a target like an EPS target or a profit target. But this measures fails as a comparison metric. So the correct format will be Return on Investment. I believe this is highlighted in APICS CSCP courses. Remember Dupont Analysis.

    1. OTIF – This is a noble measure as well. Most supply chains should strive to provide the required service level to keep customers happy. But service levels cost money – real money in fact plenty of dollars. So this has to be balanced against the cost of providing the service ==> inventory costs, expediting costs, reserve capacity costs. One can provide OTIF if they have an unlimited cost budget.

    So this OTIF does not qualify as an organizational measure unless measured against cost. So we have the problem of “no denominator” here. No corporate management will like an OTIF level at a very high execution cost. You can lose your shirt and go out of business. Even Charitable organizations should have an OTIF measured against execution cost.

    I generally believe there should be two metrics for every function.  See my other entries on this blog and the www.demandplanning.net web pages.

    Going back to single KPI for the entire organization, that may still be possible if we look at Corporate Finance literature………

    Even ROI does not qualify as that single measure. Finance literature says that ROI is not adjusted for firm risk. For example, you can borrow a lot of money and invest. This will increase your firm risk.

    At least according to the Noble laureates in Finance, the single best measure for a company is its stock price. The goal of a CEO is to maximize stockholder value.

    Perhaps that sounds too capitalistic, but that is one reason most middle management to upper management gets rewarded with stock options. Perhaps everyone in the organization should be rewarded with some stock options.

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  • 24Jun

    There was big discussion on the APICS Board about the single KPI to use to measure the manufacturing operation.  This is a great question because the user forces people to think of a single KPI to preclude all others.  So the idea is to cull out the most important metric – not a consultant’s omnibus recommendation that provides a laundry list of metrics.

    What should it be?

    • Cost of production per unit
    • TAKT time
    • throughput
    • waste
    • service levels
    • profit
    • Return on Investment
    • Yield

    They all look like good measures but none of them would qualify as the single most important metric for manufacturing.  I always preach that there should be two metrics for each function-

    1. A local functional metric – to measure what they do best and how they best they use what they learned in college for their particular operation.
    2. A holistic organizational metric that they control – This measure is not so obvious and easy to miss.

    It so turns out that many organizations measure their functional organizations by the first one but totally miss the boat on the second one.  To compensate for this grand miss, they come up with another metric that is really a functional metric for some other function.

    For example, they may measure manufacturing by profits or ROI or service levels – which they do not control.

    Let us examine service levels or profits. Measures that are noble indeed but manufacturing does NOT control them. They need to be measured on these as well, but these two measures are indeed KPIs for the entire organization. There is no special incentive for manufacturing to achieve these measures.

    The holistic organizational metric for manufacturing is Schedule Adherence – the percent of production plan that they achieved on time (may be with some slack say +/- 2 days), in full (may be with some slack say +/- 5%), perfect quality (99% acceptance).  Manufacturing fully controls this metric and the rest of the organization is desperately hoping that they will produce to the production plan – a plan that was carefully put together after considering the demand forecast and the degree of the forecast error in the form of safety stock.

    If they do not adhere to the production plan, then everything else is a hog wash. Driving to profits or ROI is indeed wasted effort – one that involves everyone in the organization chasing their tails.

    Schedule Adherence – YES the one KPI that manufacturing controls almost exclusively.

    Schedule Adherence – YES the KPI that tells the rest of the organization that manufacturing is a team player. It reviews and adheres to the demand plan or the demand forecast and the resulting production plan or MRP run that it uses in its detailed production schedule.

    Schedule Adherence – YES the KPI that gives confidence, as you rightly mention, to the rest of the organization that they can deliver to the required customer service levels and manufacturing will NOT produce too much or run large batches to improve their efficiency and lower their cost.

    Their functional metrics can be costs, throughput and efficiency but their organizational metric should be Schedule Adherence.

    A manufacturer’s passion to drive to lower costs and better thoroughput is rightly checked by schedule adherence.  Produce the right quantity at the lowest cost possible!

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