Demand Planning.Net: Are you Planning By Exception?
Demand Planning.Net
demand planning, forecasting, and exception management

Demand Planning and Inventory Optimization

On-site Four Day workshop on Forecasting and Inventory Management.

- To schedule this customized on-site workshop, please contact us

View and print seminar brochure (PDF)

This program has been developed to communicate industry best practices in the area of inventory management and demand planning to Supply Chain professionals.  This workshop aims to provide the necessary technical background to enable attendees to develop & implement new practices & procedures in supply chain management into their own business units.

The objective of this workshop is to empower Supply Chain Managers to leverage the power of demand planning and to incorporate the best practices in materials management. This workshop will holistically present the best practices in creating a demand plan and explain the concepts and calculations for optimizing your inventory parameters. We preach true inventory optimization - help you to establish the right parameters your process and systems may need to run a lean machine with just optimal inventories to deliver the service and fill rates.

This is a hands-on, practical workshop with many exercises and case studies and excel based work out problems. Every planner and material manager will leave the training hall with a diverse skill set to do their day to day jobs.

As a result of this workshop, the participants will be able to:

  • Explain Demand Planning essentials in forecasting, the role of the Demand Planner and appropriate links to the sales organization.
  • Understand and apply basic tools and techniques for driving effective demand planning, including statistical techniques, development of forecasting models, data analysis and use in forecasting, measurement and analysis of demand planning accuracy and managing exceptions.
  • Understand the link between demand planning and how it quantifiably affects inventory and asset investment to the organization.
  • Understand the financial trade-offs made between investing in inventory/assets, versus the costs of holding excess of these items.
  • Manage Inventory scientifically by measuring KPI, establishing safety stock and reorder point
  • Leverage statistical forecasting techniques for creating and communicating the demand plan with commercial and manufacturing partners
  • Understand and apply the principles of forecasting, including statistical techniques, accuracy measurement, data management and filtering, and application of modeling to forecasting problems

Detailed Agenda of the Workshop

Day One

7:45AM to 4:45PM

07:45 – 08:00 am Registration

08:00 – 08:45 am

  • Introduction by Corporate Sponsor
  • Global Demand Planning and Material Management Strategy
  • Importance of workshop
  • Introduction to the Four-Day Program by Mark Chockalingam

08:45 – 09:45 am Group Introduction

09:45 – 10:00 am Coffee Break

10:00 to 12:00pm Demand Planning and Management

  • Introduction to Demand Planning- What, Why and How?
  • The Service – Cost – Balance Model
  • Key components of demand
  • Local vs. Strategic Demand
  • Revenue and Margin perspective and the Stock Holder Value Model
  • Profitability vs. Productivity
  • Cash-to-cash Cycle and Financial Analysis
  • Operational efficiency and Profitability
  • Key Concepts in Demand Planning
  • Forecast Horizon, Buckets & Periodicity

12:00 to 1:00pm – Lunch

01:00 – 2:00pm Case Study

  • Assignment of Individual case study
  • Formation of three to four person teams
  • Description of case study

    • Case study of operations at a warehouse
    • Management’s pain point and how to scientifically control it
    • Attendees will be get transaction data of 50 SKUs from one warehouse
    • Submit case study solution: Calculation and analysis of inventory parameters expected
  • (Due by 8 PM on day three (By Email)

02:00 – 3:15pm Purpose of Inventory – Introduction to Inventory Management Principles – Developing the Service Strategy

    Inventory Categories

    • Direct materials
    • Indirect Materials
    • MRO OEM
    • MRO Industrial

    Inventory Strategies

    • Make to Order
    • Make to Stock
    • Assemble/Build to Order
    • Postponement
    • Mass customization
    • Engineer to Order

    Purposes of inventory

    • Buffering
    • Hedging
    • Decoupling
    • Economies of scale

03:15 – 03:30 pm Coffee Break

03:30 – 4:30pm Demand Consensus Process

  • Symptoms of a Fragmented Corporate Planning Process
  • Bottom Line Effects of Fragmented Planning
  • Sales & Operations Planning
  • Demand and Supply Balancing
    • Volume Planning
    • Item Level Exceptions
    • Service Planning Model
  • Demand Planning vs. Demand Management
  • Sales & Marketing Input
  • Demand Consensus
Day Two

07:45 – 04:30 pm

07:45 – 08:00 am Recap of Day 1

07:45 – 08:00 am Toolkit for Materials Management

  • Data Requirements/Analysis for Demand Forecasting
    • Data cleaning challenges
    • Graphical Review of Data
    • Data filtering
    • Structural Changes and data shifts
  • Demand volatility
    • Measuring volatility
    • Central Tendency
    • Co-efficient of Variation (CV)
  • Outliers and Missing Data
    • Process to Identify Outliers
    • Outlier Correction

10:30 am – 12:00 pm Principles of Inventory Management

  • why carry inventory?
  • Elements of carrying cost
  • Average Inventory
  • Economic Order Quantity
  • Purchase Quantity Discounts

12:00 pm – 01:00 pm Lunch Break

10:30 am – 12:00 pm Inventory Optimization

  • Independent Demand vs. Dependent Demand
  • Establishing Safety Stock & Reorder Point
    • Max Min
    • Reorder Point
    • Dynamic Lot sizing
    • Effect of lead time
    • Effect of intermittent demand
    • Cycle time
    • Average Inventory
    • ROP vs. EOQ
    • Lifetime buys and pitfalls to avoid

03:00 pm – 03:15 pm Coffee Break

03:15 pm – End of day Work on Individual Case study

Day Three

8:15AM to 4:30PM

8:15 am to 8:30 am Recap of Day 2

8:30 am to 10:00 am Manage by Exception

  • Product Segmentation for Forecast Modeling
  • Volume Volatility Criteria to Segment SKUs
  • Pareto Analysis of volume
  • Measurement of Demand volatility using CV
  • Process Flow for the Segmentation Strategy
  • Classification using a 2x2 matrix
  • Differential Modeling Strategy using segmentation

10:00 – 10:15aM Coffee Break

10:15 – 11.00 am ABC Classification for Inventory

  • ABC analysis – Classification philosophy
  • Pareto analysis of SKUs based on dollar usage
  • Frequency of Usage – Excess, Obsolete and Slow-moving
  • Alignment with product lifecycle
  • Process flow for segmenting skus using the above techniques
  • Example using a three dimensional matrix; ABC / Volume / Critical / Status: excess, obsolete

11:00 – 12:00pm Modeling and Graphical Decomposition

  • Forecast Model
  • Key Components of a Demand Plan
  • Illustration of Demand components
  • Demand Volatility
  • Predictable and Unpredictable Volatility
  • Understanding the components
    • Trend
    • Seasonality
    • Cyclicality
  • Forecast Modeling by Decomposition

12:00 – 1:00pm Lunch Break

01:00 – 3:15pm Introduction to Forecast Modeling

  • Introduction to Forecast Modeling
    • Qualities of a good Statistical Forecast
    • Balancing between Model Fit vs. Robustness
    • Ex-post forecasting for Modeling
    • Optimal Model Selection using Diagnostics
  • Time Series versus Multi-Variate Methods
    • First Order Exponential Smoothing Models
    • Holt Winters Models to model trend and seasonality
    • Baseline vs. event forecasting
  • Forecast Modeling with software
  • Forecast model examples with your dataset

03:15 – 3:30pm Coffee Break

03:30 – End of Day

  • Work on individual case study
  • Q & A with the facilitator
Day Four

8:15 am to 8:30 am Recap of Day 3

8:30 am to 10:30 am Work-site Inventory Management Techniques including Kanban

  • Cycle Counting
    • Need for timely / accurate on hand data
    • Cycle counting process
    • Determining the cycle count load
  • Kanban systems
    • Kanban & Pull systems concepts
    • Determining Kanban container quantity
    • Determining Kanban container safety stock
    • Determining the total number of Kanbans
    • Kanaban parameters: Min-Max, re-order point, and average inventory

10:30 am to 10:45 am Coffee Break

10:45 am to 12:15 pm Multi-echelon distribution

  • Definition
  • Common multi-echelon models
  • Determining inventory location: hub or end of spoke
  • Inventory in Multi-echelon Distributions
  • Square Root Law of Inventory management
  • Exercises

12:15 pm to 01:15 pm Lunch

01:15 pm to 02:30 pm Measurement and KPIs for Inventory Management

  • Service Level measurements
    • SC Reliability
    • Fill-Rate and On-time Delivery
    • Order complete
    • Flexibility
    • Adaptability
  • Inventory Performance Measures
    • Inventory Accuracy
    • Inventory Turns
    • At-Risk

    02:30 pm to 02:45 pm Coffee Break

    02:45 pm to 04:00 pm Forecast Accuracy

    • Forecast accuracy - MAPE, Bias and SKU Mix
      • Calculation exercise
    • Supplier Performance Measures
      • Schedule Adherence
      • Lead Time Adherence
    • Relationship between Schedule Adherence, Customer Service and Inventory Availability

    04:00 pm to 04:30 pm Feedback session


    To schedule a customized on-site workshop, please contact us.

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