Demand Planning

2. Demand Planning Bob May senior product manager

3. Agenda • Introducing demand planning within RapidResponse • The demand planning cycle • Consensus demand planning in RapidResponse • Statistical forecasting in RapidResponse • Wrap-up

4. Introducing Demand Planning Within RapidResponse • Strong market pull for S&OP solutions • Demand planning is core to the S&OP cycle • Often carried out with a mix of tools. Key objective is to consolidate by providing core capabilities in RapidResponse • Enablers supporting demand planning in RapidResponse • Support of multiple, separate streams of forecast data • Support of multiple, separate streams of historical forecast and actual demand data • Statistical functions • Hierarchies that support aggregation/disaggregation

5. Demand Planning Cycle Sales Data Conditioning Product Life Cycle Statistical Forecast Creation • Errors • Outliers • Overrides • NPI • Profiles • Statistical methods • Disaggregation • Accuracy review Collaborative Forecasting Consensus Demand Planning • Collect forecast inputs from sales, customers • Review alternatives • Reconcile inputs • Develop one or more alternative demand plans

6. Consensus Demand Planning • Define any number of forecast streams to support input from available sources including statistical, sales, finance, marketing, customers and causal streams • Supports the ability to adjust demand plan using positive and negative values • Baseline plan definition is configurable

7. Collaborative Forecast Collection • Simple, standard views used to update forecasts from sales, marketing and finance roles • Provides visibility into actual demand, previous plan, current plan and proposed new plan • Each view updates the appropriate stream, which then flows into the consensus demand planning views

8. Sales Data Conditioning • Features • Identify and adjust input data for the following conditions • Gross data errors (zero values/missing values) • Outliers (default is +/-2 standard deviations from the mean) • Causals (“lumpy” demand that is not considered “forecastable”) • Views provide suggested replacement values for errors and outliers • Select forecast periods to view • Planner is editing adjustments (original values are not lost)

9. Product Life Cycle • Create forecasting profiles (series of forecast factors) based on representative product life-cycle patterns • Generate forecasts for new items, items nearing end-of-life or items affected by significant events • Base generated forecast on a reference forecast or specific target quantity

10. Statistical Forecast Creation • Configure statistical forecasting for items at any level of product or other (e.g. regional, customer) hierarchies • Generate multiple, unique streams for any forecasted item e.g. sell-in and sell-through using actual/forecast categories • Identify new/changed items that have not been associated with any forecast item or appear to be configured incorrectly

11. Statistical Forecast Creation • Features • Choose from a number of standard statistical models: • Double Exponential Smoothing • Holt-Winters • Crostons • Linear • Best Fit • Configure best-fit evaluation measure • Calculate or override smoothing constants • Specify calendar, future and historical horizons • Can generate updated forecasts in real time as part of forecast remodeling (based on changes to forecasting parameters)

12. Statistical Forecast Review • Review actual demand, output of fit function, generated future forecast and model used (if Best Fit) • Review standard measures of fit including RMSE, MSE and MAPE • Review forecasts generated by life cycle profiles • Review any warnings generated by the forecasting function

13. Forecast Disaggregation Overrides • Default disaggregation rates are based on a function that looks at historical rates over time • Disaggregation rates can be overridden between any two levels of the product or other hierarchies (e.g. regional, customer etc.) in order to drive demand to proper items • Rates can be overridden on a time-phased basis

14. Forecast Accuracy Review • Review forecast using standard accuracy measures including MAE/Mean, MPE, and MAPD • Review accuracy for forecasted items or items at any level of the product or other hierarchies (e.g. regional, customer) • Review current or historical forecast accuracy for any forecast stream include statistical, customer, sales etc.

15. Wrap-up • RapidResponse 10.0 supports the consensus demand planning process that is integral part of each S&OP cycle • Statistical forecasting is now supported using a number of industry-standard models and includes a BestFit function • The consensus demand plan can be used to drive RapidResponse supply planning as part of S&OP “doability”, profitability, customer service analysis

16. Thank You!