Forecast error and planning horizons Forecast error Time

Forecast error and planning horizons Forecast error + Time - 1

The lead-time gap Procurement Delivery Manufacturing Logistics lead time Customer’s order cycle Order fulfillment Lead-time gap 2

Closing the lead-time gap Logistics lead time Customer’s order cycle 3

Demand penetration points and strategic inventory Driven by Demand Driven by Forecast 4

The information iceberg Order Cycle Time The Order Actual Usage / Demand 5

The supply chain fulcrum (a) D C I DP Key D : DP: C : I : Demand Decision Point Capacity Inventory 6

The supply chain fulcrum (b) D C I DP Visibility and Velocity enable the fulcrum to be placed nearer to Demand in order to reduce the need for inventory and/or capacity. 7

The supply chain fulcrum (c) D C I DP 8

Visibility and velocity drive responsiveness Postponement Simplification Collaborative Planning Reduce nonvalue adding time Streamlined processes Reduce batch sizes Bottleneck Management Close to customers Responsiveness Velocity Reduce in-bound lead-times Synchronous Supply Access to real demand Process Management Internal Integration Visibility Shared Information Close to suppliers Strategic Sourcing Collaborative Planning Event Management 9

The sales and operations planning process Generate aggregate demand forecast Modify forecast with demand intelligence Create a consensus forecast Create ‘rough cut’ capacity plan Execute at individual item (SKU) level against demand Measure performance 10

The focus of demand management and planning Logistics and operations Sales and marketing Demand fulfillment Demand creation Demand management and planning Alignment of demand creation and fulfillment processes across functional and organisational boundaries 11

VICS-ECR nine-step CPFR model 1 Retailer Develop collaboration agreement Supplier 2 Proposal Create joint business plan Proposal Identify sales forecast exception Campaign/seasonal attributes 3 Campaign/seasonal attributes 4 POS Create sales forecast 5 Resolve/collaborative on sales forecast exception Exception items 6 Create grocery store sales forecast POS 7 Create grocery store sales forecast 8 9 Central Order Supplier Delivery 12