lect6 - Larry Lapide, 2006 Page 1 Demand Forecasting,...

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Unformatted text preview: Larry Lapide, 2006 Page 1 Demand Forecasting, Planning, and Management Lecture to 2007 MLOG Class September 27, 2006 Larry Lapide, Ph.D. Research Director, MIT-CTL Larry Lapide, 2006 Page 2 What Are Demand Forecasting, Planning, and Management? What should we do to shape and create demand? Demand Planning What will demand be for a given demand plan? Demand Forecasting How do we prepare for and act on demand when it comes in? Demand Management Larry Lapide, 2006 Page 3 Agenda Industry Trends Demand forecasting Process Methods Demand planning (with supply in mind) Demand management Larry Lapide, 2006 Page 4 Industry Trends Movement From Push to Pull anufacturing Make what we will sell, not sell what we make! Manufacturers Distributors/ Wholesalers Retailers Consumers Suppliers Manufacturers Distributors/ Wholesalers Retailers Consumers Suppliers Figure by MIT OCW. Larry Lapide, 2006 Page 5 Aligning supply and demand plans to helps ensure optimized profitability Production/ Planning Production/ Scheduling Demand Planning Inventory Planning Procurement Planning Now Moving to Demand-Driven and Commercialized Supply Chains Larry Lapide, 2006 Page 6 Agenda Industry Trends Demand forecasting Process Methods Demand planning (with supply in mind) Demand management Larry Lapide, 2006 Page 7 A Business Needs a Forecast of What Might Happen, Not Just a Real-time View A Business Needs a Forecast of What Might Happen, Not Just a Real-time View Image from comic strip removed due to copyright restrictions. Larry Lapide, 2006 Page 8 Demand forecasting supports corporate-wide planning activities Level of Forecast Strategic( years) Tactical ( quarterly) Tactical (months/weeks) Operational( days/hours) Purposes Business planning Capacity planning Brand plans Financial planning/budgeting Sales planning Manpower planning Short-term capacity planning Master planning Inventory planning Transportation planning Production scheduling Inventory deployment Operational Forecasts Why Do Companies Need to Forecast? Larry Lapide, 2006 Page 9 Forecasting Process: Four Success Factors 1. An integrated forecast organization 2. Single number forecasting process 3. Part of a Sales and Operations Planning (S&OP) process 4. Performance measurements Larry Lapide, 2006 Page 10 1. Forecasting Organization integrated approach is driven by a stakeholder organization that is chartered ith driving commitment and accountability to single number consensus-based forecasts General Manager Marketing Production Sales Finance Logistics/ Forecasting Forecast administration driven by a stakeholder Stakeholder responsible for getting input from others Responsible for driving to a reconciled consensus forecast Less important which function is stakeholder, but usually marketing or operations Integrated Approach Larry Lapide, 2006 Page 11 1. Forecasting Organization: Where Function Resides Where the Forecasting Function Resides*:...
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lect6 - Larry Lapide, 2006 Page 1 Demand Forecasting,...

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