Demand Management with SAP

Over the past 14 years, Chris Foti has worked with dozens of manufacturers and distributors interested in improving their supply chains. He has studied industrial engineering and logistics at both Rennselaer Polytechnic Institute and the Massachusetts Institute of Technology. Chris has worked for SAP for the last 8 years, and is currently the Director of Supply Chain Management Customer Networks. Jessie Chimni, Vice President Consulting Services at Bristlecone America has over 17 years of professional experience in the areas of supply chain management and business intelligence processes and solutions, particularly in the electronics, semiconductor and CPG industries. Jessie serves as co-leader for the high technology area of Americas SAP User Group (ASUG), and is a regular presenter at supply chain management conferences.

* ... Acknowledgments ... 15 * ... Preface ... 17 * 1 ... Introduction ... 21 * 1.1 ... Defining Demand Management ... 22 * 1.2 ... The Relevance of Managing Demand ... 24 * 1.3 ... The Balance Sheet and the Income Statement ... 27 * 1.4 ... The Role of Demand Management within Sales and Operations Planning ... 29 * 1.5 ... SAP Solutions Overview ... 30 * 1.6 ... Summary ... 33 * 2 ... Projecting Demand ... 35 * 2.1 ... Assembling the Parts into a Whole ... 35 * 2.2 ... Ascertaining the Size and Shape of a Market ... 38 * 2.3 ... Sales and Operations Planning within APO Demand Planning ... 41 * 2.4 ... Summary ... 43 * 3 ... Engaging in Demand Planning ... 45 * 3.1 ... How Companies Engage in Adopting Demand Management ... 45 * 3.1.1 ... Process ... 48 * 3.1.2 ... Technology ... 49 * 3.2 ... Finding the Value to Create a Business Case ... 50 * 3.2.1 ... Deliverables ... 55 * 3.2.2 ... Engagement Plan ... 56 * 3.2.3 ... Process ... 57 * 3.2.4 ... Case Study ... 63 * 3.3 ... What SAP Solutions Can Support This ... 65 * 3.3.1 ... SAP Business Suite for Demand Management ... 66 * 3.3.2 ... Core Demand Planning with SAP ERP ... 68 * 3.3.3 ... SAP Supply Chain Management (SCM ... 69 * 3.3.4 ... Advanced Demand Planning with SAP APO ... 70 * 3.3.5 ... Composite Demand Planning with Duet and SAP SCM ... 73 * 3.3.6 ... Easy to Use Planning Sheets ... 74 * 3.3.7 ... Flexible and Efficient Planning ... 75 * 3.3.8 ... Customer Collaboration Using SAP Supply Network Collaboration ... 76 * 3.4 ... Summary ... 77 * 4 ... Statistical Forecasting ... 79 * 4.1 ... Looking Back to See Ahead ... 79 * 4.2 ... Basic Statistical Forecasting Algorithms ... 81 * 4.2.1 ... Constant Demand ... 82 * 4.2.2 ... Trend Demand ... 83 * 4.2.3 ... Seasonal Demand ... 84 * 4.2.4 ... Seasonal Trend Demand ... 85 * 4.2.5 ... Lumpy Demand ... 85 * 4.2.6 ... First-Order Exponential Smoothing ... 86 * 4.2.7 ... Second-Order Exponential Smoothing ... 90 * 4.2.8 ... Model Fit: Ex-Post Forecast and Outliers ... 91 * 4.3 ... Planning Books ... 94 * 4.3.1 ... Data View ... 95 * 4.3.2 ... Selection Profile ... 95 * 4.4 ... Summary ... 99 * 5 ... Interactive Planning and Advanced Statistical Forecasting ... 101 * 5.1 ... Characteristic Combinations and Data Selections ... 101 * 5.1.1 ... Introduction to Characteristic Combinations ... 102 * 5.1.2 ... Creating Characteristic Combinations ... 103 * 5.1.3 ... Displaying Characteristic Combinations ... 107 * 5.1.4 ... Data Selections in Interactive Demand Planning ... 108 * 5.2 ... Statistical Forecast: Core Functionality Setup ... 111 * 5.2.1 ... Forecast Profile ... 113 * 5.2.2 ... Executing the Forecast ... 118 * 5.3 ... Running the Forecast in Interactive Planning ... 121 * 5.3.1 ... Forecast View Tabs ... 124 * 5.3.2 ... Forecast Comparison ... 129 * 5.4 ... Using Like-Modeling and Phase-In/Phase-Out to Support Product Planning Across Its Lifecycle ... 131 * 5.4.1 ... Like-Modeling ... 132 * 5.4.2 ... Phase-In/Phase-Out Modeling ... 133 * 5.5 ... Incorporating Custom Forecasting Algorithms ... 138 * 5.6 ... Statistical Forecasting in SAP ERP and SAP APO ... 139 * 5.7 ... Summary ... 143 * 6 ... Leading Indicators ... 145 * 6.1 ... Examples of Business Indicators ... 145 * 6.2 ... Complementary Products ... 147 * 6.3 ... Causal Forecasting in SAP APO Leveraging Multiple Linear Regression ... 148 * 6.3.1 ... Data Requirements ... 149 * 6.3.2 ... Executing the MLR Forecast ... 151 * 6.4 ... Summary ... 153 * 7 ... Downstream Demand ... 155 * 7.1 ... Vendor-Managed Inventory and Collaborative Planning, Forecasting, and Replenishment Leveraging SAP APO ... 155 * 7.2 ... CPFR Process Overview ... 157 * 7.2.1 ... Stage 1: Initial Agreements ... 159 * 7.2.2 ... Stage 2: Forecasting ... 160 * 7.2.3 ... Stage 3: Replenishment ... 162 * 7.2.4 ... CPFR: Revised Model ... 163 * 7.3 ... Comparison of VMI and CPFR Processes ... 165 * 7.4 ... Collaborative Planning Process in SAP APO ... 167 * 7.4.1 ... Collaborative Demand Planning Process in SAP APO ... 169 * 7.4.2 ... Settings for Collaborative Demand Planning in SAP APO ... 171 * 7.4.3 ... VMI Process in SAP APO ... 176 * 7.5 ... Consumption Data and the Vision Chain Demand Signal Repository ... 183 * 7.6 ... Customer Collaboration with SAP SNC ... 187 * 7.6.1 ... Generating Forecasts in SAP SNC ... 188 * 7.6.2 ... Collaborative Sales Forecasting (CSF) ... 191 * 7.6.3 ... Settings for Consensus Finding Framework ... 194 * 7.6.4 ... Collaborative Sales Forecasting Process ... 196 * 7.6.5 ... Short-Term Forecasting Process ... 198 * 7.6.6 ... Replenishment Planning ... 201 * 7.7 ... Summary ... 202 * 8 ... Marketing ... 205 * 8.1 ... The Gap Between Projections and Expectations ... 206 * 8.1.1 ... Pulling Demand Forward ... 206 * 8.1.2 ... Increasing Your Market Share ... 208 * 8.2 ... The Four Ps of Marketing ... 215 * 8.2.1 ... Product ... 216 * 8.2.2 ... Pricing ... 216 * 8.2.3 ... Placement ... 217 * 8.2.4 ... Promotion ... 218 * 8.3 ... Promotions in SAP APO ... 219 * 8.3.1 ... Promotion Planning Process: Overview ... 219 * 8.3.2 ... Promotion Base ... 219 * 8.3.3 ... Cannibalization Group ... 221 * 8.3.4 ... Create Promotional Planning in SAP APO ... 222 * 8.3.5 ... Postpromotion Evaluation ... 227 * 8.3.6 ... Promotion Reporting ... 230 * 8.4 ... Promotional Forecasting in Customer Collaboration ... 232 * 8.4.1 ... Promotion Planning in SAP SNC ... 232 * 8.4.2 ... Maintaining Promotion Patterns and Event Types ... 237 * 8.4.3 ... Maintaining Offset Profile ... 239 * 8.4.4 ... Assigning Promotion Parameters ... 241 * 8.4.5 ... Create Promotional Planning in SAP SNC ... 242 * 8.5 ... Summary ... 244 * 9 ... Sales ... 245 * 9.1 ... Guidance, Incentives, and Information ... 246 * 9.2 ... Configuring SAP APO Demand Planning for Sales Input ... 247 * 9.2.1 ... Designing Planning Books and Layouts for Sales Input ... 248 * 9.2.2 ... Assigning Users to a Data View ... 250 * 9.2.3 ... Creation of Consensus Demand Plan ... 251 * 9.3 ... Sales Input through Duet Demand Planning ... 254 * 9.3.1 ... Working with Duet to Input Sales Data ... 255 * 9.3.2 ... Planning Sheets ... 255 * 9.3.3 ... Designing Planning Sheets Using the Wizard ... 256 * 9.3.4 ... Sales Input through Planning Sheets ... 258 * 9.4 ... Summary ... 260 * 10 ... Pulling It All Together ... 261 * 10.1 ... Map, Mirror, Headlight, and GPS ... 261 * 10.2 ... Consensus Demand Planning ... 262 * 10.3 ... Demand Combination in SAP APO ... 269 * 10.4 ... Summary ... 274 * 11 ... Realize Demand ... 275 * 11.1 ... The Balance Sheet and the Income Statement ... 275 * 11.2 ... Strategic (Long-Term) Decisions ... 278 * 11.3 ... Operational (Medium-Term) Decisions ... 280 * 11.4 ... Tactical (Short-Term) Decisions ... 284 * 11.5 ... Impact of Downstream Events on Demand Management ... 285 * 11.6 ... Operationalizing the Demand Plan ... 293 * 11.6.1 ... Supply Network Planning (SNP ... 293 * 11.6.2 ... Materials Requirement Planning (MRP ... 300 * 11.6.3 ... SAP APO Global Available-to-Promise (GATP ... 303 * 11.7 ... Summary ... 305 * 12 ... Process and Performance Management ... 307 * 12.1 ... Identify and Confront Bias ... 307 * 12.2 ... Assigning Responsibility for Accuracy ... 309 * 12.3 ... Absolute and Weighted Metrics ... 309 * 12.4 ... Lagged Accuracy ... 313 * 12.5 ... Reporting Forecast Accuracy with SAP APO and SAP NetWeaver BW ... 314 * 12.5.1 ... Steps for Extracting Planning Data ... 315 * 12.6 ... Summary ... 328 * 13 ... Managing a Change Process ... 331 * 13.1 ... Selecting a Team or Partner ... 331 * 13.1.1 ... Different Types of Implementation Partners ... 331 * 13.1.2 ... What to Look for in an Implementation Partner ... 333 * 13.1.3 ... Importance of Implementation Methodology ... 336 * 13.2 ... Governance Model ... 337 * 13.2.1 ... Project Governance Framework ... 339 * 13.2.2 ... Key Elements of Successful Project Governance ... 343 * 13.3 ... Sequencing and Scope of Solutions Implementation ... 345 * 13.3.1 ... Quick Benefit Realization ... 345 * 13.3.2 ... Minimizing Change Management ... 346 * 13.3.3 ... Minimizing Rework ... 346 * 13.3.4 ... Staffing Constraint ... 347 * 13.4 ... Project Management Methodology ... 348 * 13.4.1 ... ASAP Toolset ... 349 * 13.5 ... Global Engagement Delivery Model (GEDM ... 350 * 13.5.1 ... GEDM: Assessment and Discovery Engagement ... 351 * 13.5.2 ... GEDM: Blueprint ... 352 * 13.5.3 ... GEDM: Realization ... 354 * 13.5.4 ... GEDM: Go-Live Preparation ... 356 * 13.5.5 ... GEDM: Go-Live and Support ... 356 * 13.6 ... Defining Project Success Criteria ... 357 * 13.6.1 ... Financial and Operational Metrics ... 358 * 13.6.2 ... Stakeholder Satisfaction ... 359 * 13.6.3 ... Meeting Project Objectives and Requirements ... 359 * 13.6.4 ... Within Budget ... 360 * 13.6.5 ... Within Timelines ... 360 * 13.6.6 ... Value Added to the Organization ... 360 * 13.6.7 ... Quality Requirements ... 361 * 13.6.8 ... Team Satisfaction ... 361 * 13.6.9 ... Relationship with the Consulting Partner ... 361 * 13.6.10 ... Ability to Sustain the Implementation Successfully ... 361 * 13.6.11 ... Ability to Be a Customer Reference ... 362 * 13.7 ... Tracking the Value ... 362 * 13.8 ... Summary ... 363 * 14 ... Conclusion ... 365 * 14.1 ... Financial and Strategic Implications of Managing Demand ... 365 * 14.2 ... Project, Impact, Realize, Correct ... 366 * 14.3 ... SAP Solutions ... 369 * 14.4 ... Case Study ... 371 * 14.5 ... Benefits of Demand Planning Systems ... 373 * 14.6 ... Summary ... 377 * A ... Business Planning ... 379 * A.1 ... Expectations and Guidance by Public Companies ... 379 * A.2 ... Establishing the Product Mix ... 381 * A.3 ... Setting Sales Targets ... 382 * A.4 ... Business Planning and Consolidation ... 387 * A.5 ... Summary ... 387 * B ... The Authors ... 389 * ... Index ... 391