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Demand Management 

 

PART II. 

 

As noted above, the SOP meeting typically begins with a review of recent performance against plan for each functional area. Actual customer order bookings are compared with the demand forecast. Actual production and inventory levels are compared with planned levels.

In most cases, reports and slides are prepared in a prearranged format and scope, often via spreadsheets. If the data loads are not fully automated, the data are old or error-filled by the time it reaches the meeting. Frequently, there is not enough detail available to answer pointed questions or enough history to reveal long-term trends.

Most important, since the data and formats are fixed, there is little or no ability to generate even simple new analyses or comparisons on the fly. By definition, when the analysis itself becomes fixed and predictable, it is not serving the business well.

For example, let's say that our SOP meeting has begun and right off the bat, a spreadsheet-based report indicates that the demand forecast for Product Group X was off for the preceding four weeks. Orders exceeded forecast causing numerous difficulties. Why did orders exceed forecast for the group? Which products' sales were up? Which, if any, were down? Were there similar (seasonal) occurrences in past years? If so, how dramatic?

The next slide, complete with 3-D bar chart, shows that finished goods inventory went up by 5% during the same period. How did inventory go up while orders exceeded forecast?! Clearly, we must have built what we didn't need. Which products were over­built? When (in which week) did we know and when (if ever) did we react?

Certainly, the participants must prepare for these meetings. But rather than attempting to generate spreadsheets and slides for all possible questions and answers, we need to bring the data and the interactive analytical tools into the meeting. This means we need data and good Supply-Demand analysis or Demand Management software on notebook computers with data display units.

For SOP purposes, we don't need real-time demand and supply data, but it should be current to the day. That means the data must be extracted automatically from its sources.

Data should be presented in an aggregate product level of detail; however, we also need sufficient underlying detail to answer reasonable questions. We need enough historical data to assess longer term trends. To manipulate these data easily and convert them into useful information, we must store them in relational databases, not spreadsheets.

Standard comparison reports and graphs should serve only as starting points for the review. From there, our systems must allow us to customize reports and graphs on the fly, to pick the time series data we want to compare, the calculations to use, the level of detail, the time periods and length of horizon.

By bringing the right data and tools into the SOP meeting, we enable the participants to ask and answer questions. More ques­tions are answered in the SOP meeting itself instead of behind closed doors in follow-up meetings. These questions and answers lay important groundwork for the subsequent meeting tasks— evaluating and changing the plan.

To be Continued


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