Demand Management Dr. Ron Tibben-Lembke SCM 461
Mar 29, 2015
Demand Management
Dr. Ron Tibben-LembkeSCM 461
Role of Demand Management Collect information from all demand
sources Customers Spare parts
Negotiate and Confirm shipping dates, quantities
Confirm order status, communicate changes
Different Environments Factory to customers – plant very aware of
customer needs Factory to DC – stable replenishment plan Plan vs. Forecast:
Forecast is what you think demand will be like Plan is how you will respond to demand “A manager cannot be held responsible for not getting a
forecast right.” How are you going to respond to changes in demand? You have control over the plan and execution, not demand Rain forecasted? You decide to bring umbrella or not. Planning a BBQ: 300 people? 500?
Independent vs. Dependent Demand Feeding manufacturing, demand for parts is
dependent on manufacturing plan Sales to customers are independent of our
(production) activities. Customer order decoupling point: when control of
timing passes from customer to us Make to stock – Finished goods Assemble to Order – WIP Make to Order – Raw Materials Engineer to Order - suppliers
Make to Stock Customers buy finished, generic product
McDonalds’ heat lamp days Triggers signal to make more Use warehouses, DCs to fulfill demand Maybe VMI? Tradeoff of more flexible manufacturing,
faster response, for less inventory
Assemble to Order Define customer’s order in terms of alternative
components and options Subway, In-N-Out
Configuration management: combine options properly into a buildable final product
Flexibility in combining components, options, and modules
Movement from MTS to ATO – less inventory, fresher product, better sales
Combinations: 31 ice cream * 4 sauces * 12 sprinkles = 1,488
Make/Engineer to Order No stock components to assemble
Cooking at home – could make any of the standard things you usually make: burger, pizza, chili, etc., etc.
Include Engineer to Order Tell me what you’d like – fancy restaurant
Significant design element in order creation
Don’t know possibilities of what customers might buy
What do you think? Which method is best? What kinds of uncertainty are involved in
each? What determines customer service in
each? What is the decoupling point in each
system?
Communication with Depts. SOP – give forecasts, get prod. Plans
Capacity: material (MTS), labor (MTO) Timing of deliveries & production
Master Production Scheduling Detailed order info to MPS Status of each order
Figs 2.5, 2.6
Forecasting Framework Fig. 2.7, p. 30
Aggregating Demand Long-term, or product-line forecasts more
accurate than short term or detailed forecasts Monthly: Avg = 20, std dev =2
95%: 16-24 which is +/- 20% Annual: Avg = 20 * 12 = 240 Std. Dev = 2 * sqrt(12) = 6.9
95%: 226-254, which is +/- 5.8% Easier to forecast demand for components
than for sales of particular car configurations.
Aggregating Demand Individual item forecasts must add up to
correct total Individual item percentage of total
probably constant Pyramid forecasting – bring things into
alignment Force people to accept higher targets without
“owning” them
PredictingDemand
Shared components
GrandPrix
GrandAm
GrandPrix
2006 Solstice
MSRP around $20,000
HP Inkjet Printers Printers made in Vancouver, sent via ship
through Panama Canal to Europe Europe warehouse stocks inventory by
country physically different-- power supply manuals different languages Substitution not allowed
Re-supply time very long
Euro Plugs No standardized
power supplies for Europe
Different power supply for every country.
HP Inkjet Printers Redesigned printers so that power supply
added in Europe Re-engineer product, power supply Assembly done in a warehouse (Quality?) Manuals added in Europe Many expensive changes
Store ‘vanilla’ boxes Postpone point of differentiation
Delayed Customization
Production Storage Shipping Storage
Before
After
Benetton Benetton sweaters made of undyed wool,
dyed once demand is known Dyeing LT much faster than production How many undyed sweaters to make? How many Red, Green, Blue, also, if this
production process is cheaper, and you know you’ll sell some minimum amount?