Demand Planning Analytics: Potential for Businesses in Trinidad & Tobago

1. Demand Planning Analytics: Potential for Businesses in Trinidad & Tobago Gour C. Saha Professor Arthur Lok Jack Graduate School of Business Trinidad & Tobago

2. Plan of Presentation • Level Playing Field for Competition • Understanding the Caribbean • Realities of Demand Planning in T&T • Demand Planning and Demand Planning Analytics • Survey and Findings • Main Challenge to Demand Centricism • Possible Interventions

3. I. Level Playing Field for Competition Proprietary Technology Imitation • Apple Inc. has filed a complaint against HTC Corp., accusing Asia's second-largest maker of smartphones of infringing on the iPhone and iPad maker's patents. (International Business Times, July 12, 2011) • Apple has asked the U.S. ITC to block imports of Samsung Android devices it believes infringe on its patents • In the mid 2000s, it was estimated that 90 percent of the movies, music and software sold in China was pirated (http://factsanddetails.com/china.php?itemid=356=9=61)

4. Declining Breakthrough innovation

5. Declining Regulated Monopolies and Increasing Competition

6. Conclusion: • Monopoly, Technology or Radical innovation based competitiveness is tapering off globally. • Businesses now are Competing on Process sophistication through analytics (Google insight for Search) • Since businesses are more customer centric or demand centric, demand planning analytics is important.

7. II. Understanding the Caribbean Caribbean Competitiveness Table 1: CARICOM Countries in the GCI, Evolution 2009 -2011

8. Complacent Trinidad & Tobago Table 2: Sectoral Contribution to GDP in Trinidad & Tobago

9. Demand-centric Challenges and Opportunities in the Caribbean Environment Challenges • Lack of Integration and capacity -> Lack of ability to attract foreign customers and to respond to growing and individualized demand. • Small size and high openness and susceptibility to natural disasters -> reduced competitiveness to address demand • Lack of productivity: Due to high natural resource dependency Opportunities • Proximity to Latin America and Cultural Affinity to North America > Opportunity to increase competitiveness through strategic alliances. But knowledge of business predictability needs to be much more sophisticated.

10. III. Realities of Demand Planning in T&T • High Dependency on Tacit Knowledge and tweaking on first-level outcome which often results in: Incorrect pricing Incorrect mix and range of product offerings Incorrect market entry Failure or success, depends on luck • Supply chain planning using limited information In many of the small to medium size firms, points of sales systems are not in place. As such, maintaining accurate inventory records is a challenge. It often leads to increased stock out costs, or over- ordering that leads to excessive capital tied up in inventory.

11. Big firms, including Company X, a beverage company in Trinidad, has about half a million points of sales worldwide, including Walmart. With so much of raw materials and finished goods in the pipeline and the capricious nature of the packaged goods market, rely merely on historical data for production and distribution planning. • Deeper analysis is not done to predict demand and guide decision making. • Lack of Partnership/Platform for supporting each other for Individual Growth

12. IV. Demand Planning and Demand Planning Analytics • Demand planning is the first step towards business planning • Businesses are moving towards demand-centric environment. Operations planning process • Purchasing • Production • Distribution • Cash flow Demand planning (creating reliable forecasts) Serve Customer

13. Demand Planning Analytics Considers: • Degree to which demand planning process is linked to organizational strategy (For example, Senior management support for documentation, linkage of demand planning metrics to organizational objectives, Use of sophisticated software for supporting decisions, Alignment of key customers and suppliers’ information) 2.Level of sophistication of the forecasting processes (For example, regularity in forecast, use of mathematical models, use of supplier-customer integrated data system, extent of variability analysis of each product, extent of collaboration of suppliers and customers in forecasting)

14. Demand Planning Analytics (Contd..) Considers: 3. Level of Efficiency of Companies Data Management Process (For example, Ease of capture of suppliers’ past performance, accuracy of customer demand information, frequency of update of industry database of suppliers, extent of gathering market information, tracking of deviation between prediction and actual performance) • Sophistication of Reporting Process (For example, Generate instantaneous query-based reports for key decision makers, dictate generation of reports at aggregate or component level)

15. V. Survey and Findings Table 3: Industries of Companies surveyed

18. Table 4: Demand Planning Analytics – Mean and Standard Deviation Note: * significant at 5% level

19. Table 4: Demand Planning Analytics - Mean and Standard Deviation (Contd..) No items are significant at 5% level

20. Conclusions • Demand planning analytics level in T&T is at basic or moderate level, very few firms reported the level as advanced. • Perceived inventory performance is low or moderate, very few reported it high. The identical nature of the demand planning analytics and perceived inventory performance is expected to have high relationships. • Customer satisfaction, as reported, is not impacted by perceptions of inventory performance. • Detailed analysis of the demand planning analytics items suggest that most sampled firms in T&T perform their demand planning intuitively.

21. VI. Main Challenge to Demand Centricism • Most sampled firms are complacent about their perceived high customer satisfaction level. VII. Possible Interventions • Academic-industry linkages to identify champions of demand planning within industries • Implement demand planning analytics with predicted impact on performance metrics. • Viral communication of success

22. Thank You !!!