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03dis60s-demand

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03dis60s-demand

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    Unit 3Demand Management

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    4/29/2010

    Unit 3Demand Management Unit Introduction ......................................................................................................... 1

    Unit Objectives ..................................................................................................... 1

    Terminology .......................................................................................................... 2 What is Forecasting? ................................................................................................. 3 Forecasting Product Integration ................................................................................. 4

    Forecast Process Flow ......................................................................................... 5

    SPM and Forecasting ...................................................................................... 6 Forecast Modeling Overview...................................................................................... 7

    Error Measurements ............................................................................................. 8 What is Distribution Resource Planning? .................................................................. 9

    DRP Product Integration .......................................................................................... 10

    DRP Application Overview.................................................................................. 11 Distribution Relationships ........................................................................................ 13

    Planning Characteristics .......................................................................................... 15

    The DRP Algorithm............................................................................................. 17

    Netting Logic....................................................................................................... 18 Fixed Shipping Schedules ....................................................................................... 20

    Fixed Shipping Schedule Example ..................................................................... 21

    Transportation Planning ..................................................................................... 22 Resupply Orders ...................................................................................................... 23 Demand Management Review ................................................................................. 25

     Table of Contents 3-i

List of Figures

    Figure 3-1. What Is Forecasting? .............................................................................. 3 Figure 3-2. Forecasting Product Integration .............................................................. 4 Figure 3-3. Forecast Process Flow ........................................................................... 5 Figure 3-4. Use of SPM Data .................................................................................... 6 Figure 3-5. Modeling Process ................................................................................... 7 Figure 3-6. What is Distribution Resource Planning? ................................................ 9 Figure 3-7. Distribution Resource Planning Product Integration ............................. 10 Figure 3-8. DRP Application Overview .................................................................... 11 Figure 3-9. Distribution Resource Planning Process ............................................... 12 Figure 3-10. Distribution Relationships ................................................................... 13 Figure 3-11. Distribution Relationship Simplified ..................................................... 14 Figure 3-12. Planning Characteristics ..................................................................... 15 Figure 3-13. Distribution Resource Planning Algorithm ........................................... 17 Figure 3-14. Netting Logic ....................................................................................... 18 Figure 3-15. Fixed Shipping Schedule Example ..................................................... 21 Figure 3-16. Resupply Order Relationship .............................................................. 23 Figure 3-17. DRP Generation Process Flow ........................................................... 24 List of Tables

    Table 3-1. Order Policy Codes ................................................................................ 16

3-ii Supply Chain Management WorkshopStudent Guide

Unit Introduction

    BPCS Distribution Resource Planning (DRP) uses a time-phased method to determine resupply requirements at each facility (physical stock holding point). The netting logic is similar to Master Production Scheduling (MPS) and Material Requirements Planning (MRP) products. MPS and MRP use the information from the bill of materials to determine stock replenishment through shop orders and purchase orders.

    DRP uses the supply relationship between facilities to determine the stock replenishment using resupply orders and purchase orders. DRP is a closed-loop Supply Chain Management system and addresses several critical business issues.

    This unit also is an overview of the BPCS Forecasting product in relation to Supply Chain Management. Its purpose is to explain the theory behind forecasting calculations and to discuss processing flows.

    Unit Objectives

    At the end of this unit you will be able to:

    ? Define key concepts used in BPCS Distribution Resource Planning (DRP)

    ? Distribution relationships

    ? Fixed shipping schedule

    ? Resupply orders

    ? Transportation planning ? Discuss basis for generating forecasts

    ? Discuss Forecasting process flow

    ? Discuss modeling features

    ? Identify forecasting and error measurement methods used in BPCS

     Demand Management 3-1

    Terminology

    Listed below are terms presented in this unit.

You can enter forecasts of expected demand over the time Forecast

    frames. The system takes these forecasts into account when

    calculating requirements, according to the system

    parameters.

    The most common form of forecasting used by business and Judgmental Forecasting

    government. Judgmental forecasting usually emanates from

    a committee or individual subjective evaluation. The system creates “planned orders” when you run the Planned Order

    generation program (DRP500). These planned orders are

    recommendations to resupply in order to meet the calculated

    requirements at the proper time.

    Whenever you generate a schedule using DRP500, you may Planning Date

    set the planning start date to any date. The system will

    replan material requirements from that date forward.

    There are three quantitative forecasting methods: Quantitative Forecasting

    Method 1. Time series patterns identify historical patterns.

    2. Explanatory methods project historical causal

    relationships into future occurrences. 3. Monitoring methods identify pattern changes. An order to ship from one facility to another. A resupply Replenishment Order

    order is entered through customer order entry and acts like

    customer orders for the ship-from facility. An order to ship from one facility to another. A resupply Resupply Order

    order is entered through customer order entry and acts like

    customer orders for the ship-from facility. A cycle repeating itself yearly. Seasonality

    Addresses long term issues of a technological, societal, Technological Forecasting

    economic, or political nature. Method

    ? Extrapolative methods use historical patterns and

    relationships.

    ? Normative methods use objectives, goals, and desired

    3-2 Supply Chain Management WorkshopStudent Guide outcomes to influence the future.

What is Forecasting?

    Forecasting is the attempt to balance supply and demand by predicting future demand for an item. A formalized forecasting system does not entirely remove forecasting decisions from management since product-specific and market-specific information cannot be built into standardized models. The BPCS Forecasting product uses proven modeling and statistical techniques to generate demand forecasts while allowing managers the flexibility to make adjustments based on their experience.

    The figure illustrates how forecasting works.

    Figure 3-1 What Is Forecasting?

     Demand Management 3-3

Forecasting Product Integration

    The Forecasting product integrates with other BPCS products. The following flow chart

    illustrates how Forecasting relates to other BPCS products.

    Configurable

    Order

    Management

    SalesMaterial DemandPerformanceRequirements Customer Orders

    ManagementPlanning

    Forecasts

    Forecasting

    Forecasts

    DistributionMaster

    ResourcesProduction

    PlanningSchedulingInventory

    Management

    Figure 3-2 Forecasting Product Integration

    3-4 Supply Chain Management WorkshopStudent Guide

Forecast Process Flow

    Master file setup programs establish basic information required by the Forecasting product

    for processing. Usually, these programs are used only when initially setting up the system or

    making a change to the system.

    After master files are established, initialization is done to retrieve order history, shipment

    (demand) history, and forecast history as forecast basis data. The first step of initialization

    summarizes each type of demand by date. The second step loads basis data to the forecasting

    file summed by previously defined forecast periods. These initialization steps are done once.

    Subsequent gathering of history is done at the end of a period, retrieving the orders, demand

    and/or forecasts for the most recent completed period.

    The figure illustrates the forecast process flow.

    KMRECLITH

    InventoryMPS / MRPOrder

    HistoryForecastDetail

    BasisUpdateInitializationDemandBasisInitializationJFBBasisInitialization

    ForecastUpdate Update OrdersForecastsBasisReports

    Purge and Roll HistoryJFD

    Load fromForecastingBasisPeriodsReportsLoad Forecast to MPS

    Initialize fromJFHBasis

    Seasonality

    History

    ReportsJFC / JFI

    Modeling Forecast GenerationForecastingActualSimulatedDataData

    Reports

    Figure 3-3 Forecast Process Flow

     Demand Management 3-5

SPM and Forecasting

    Sales Performance Management (SPM) is able to provide the basis of demand for forecast

    generation. The following diagram depicts the use of SPM data for this purpose.

    SIL/SIHITHECLKMR

    SalesShipmentsOrdersForecasting

    JFB

    BASIS Data

     SPM Relationship

    0Forecasting Used

    1SPM Installed

    JFC/JFI2SPM Used

    Simulation

    KMR

    Material

    Requirements

    Figure 3-4 Use of SPM Data BPCS File Name Reference

    BPCS Sales History Header and Line file SIL/SIH

    Item Transaction History file ITH

    Order Detail file ECL

    Material Requirements file KMR

    Forecast Basis file JFB

    Forecast Item/Warehouse Detail file JFC/JFI

    The application control for Forecasting indicates the Forecasting/SPM relationship. SPM

    may be installed but not used in Forecasting, or SPM may pass demand data. If SPM is used

    for Forecast basis data, shipments, orders, and previous forecasts may not be used.

    3-6 Supply Chain Management WorkshopStudent Guide

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