OMSAN LOJİSTİK
Demand Management:Processes & Activities
Logistics System Planning
/M/ apping
/A/ ssessment
/B/ alancing
/O/ ptimization
/R/ econfiguration
/B/alancing of Logistics Systems
Trade-off management among logistics agents and processes
System Balancing: Two Types of Activities
• Execution• (ALL logistics systems perform these activities
intuitively or in a planned manner)
• Planning• (Deliberate activities within the logistics system with the goal
to change the system’s conditions and achieve a specific result!)
Demand Management
Fulfillment Management
Sourcing Management
Logistics Planning System
Use the Past to Understand the Future
L og is tic s P lan n in g S ys tem
G en era te D atan , n + 1 , n + 2 ,
E xecu te S tra teg y
V a lid a teP erfo rm an ce M easu res
S im u la te R ea l D a tan -1
M od e l
MODELING
Interacting VariablesDirection of Interaction
What has changed…
• Today ….
• Real Data to Prove us right or wrong
• Mistakes are more expensive and riskier
• Execution strategies are so complex you can’t afford mistakes
• Computation power unknown to logistics management
Surprise or Control
• Inductive Thinking• Plan the steps to
achieve a desired result
• Sequential • Uncertain results • Surprise• Linearity
• Deductive Thinking• Determine the
desired result• Go backwards to
understand the causes of the desired result
• Non-sequential• Control• Circularity
Demand Management
Factors Driving Logistics Change
• Shortening of product life cycles
• New product proliferation
• Power shift in the distribution channels
• Customer service as a competitive force
• Technology
• Global competition
• Cost reduction and profitability focus
Customer Service Decisions
• What Level of Service Should We Provide?– Levels constraint: A firm’s logistics system– Combine with logistics activities to provide
time and place utility; the end-result of business logistics
– Augmented product feature that adds value to the buyer
Customer Service Definition
• Three views– As an activity– As performance measurement– As a corporate philosophy
• Customer service – brand loyalty market share relationships
Measurements
• Time: Order Cycle Time (seller) Lead Times (Buyer)
• Dependability
• Communications
• Convenience
Trends in Customer Service
• The customer defines the standards
• Vendor can influence the customer
• Multidimensional
• Dynamics
• Information focus rather than inventory
• Measurable aspect
Features of a Customer Service Policy
• Unique
• Segmented
• Formal
• Proactive
• Extrapolated
Who’s the “A” Customer For…?
• … Sales & marketing?
• … Finance?
• … Purchasing?
• … Distribution center?
• … Transportation?
• … Inventory planning?
Customer Order Management
• What?• Who?• When?• How?• How Much?• Where?• …
Customer Service Policy Template
CRM = Customer Relationship Management. More than a fad
Specialized teams
Proactive service policyInformation dispersion
Performance-based rewards to sales teams
Intelligent Forecasting
Top-Down and Bottom-Up Event Calendars Incorporating Macro-economic and Industry
Indicators Individual Accountability for Forecast Accuracy Seasonality Smoothing Best-Fit Modeling Capture and Measure True Demand Measuring Forecast Accuracy by SKU and
Channel
Forecasting Discouragement
• Repeated forecasting in the supply chain amplifies errors.
• The longer the replenishment lead time the bigger the forecast error.
• Price fluctuations and promotional events cause huge, unpredictable spikes in demand.
• Shortage Gaming: Customers order more than they really need and cancel orders when the shortage is over.
• Unfilled demand is not measured.
Forecasting Principles
• Measure and monitor forecasting accuracy.
• Establish individual accountability for forecasting accuracy.
• Measure true demand:– unsatisfied demand– overstated demand due to shortage
gaming
Forecasting Principles
• Implement information sharing to let everyone know true demand.
• Establish and implement an event calendar to improve accuracy.
• Design organization and control policy to insure quick reaction to forecast errors.
Forecasting Principles
• Use bottom-up forecasting to predict category and overall business forecasts for country, region, and global sales.
• Use top-down forecasting to predict region and country sales for categories and SKUs.
• Incorporate leading/lagging economic and industry indicators in top-down forecasting.
Forecasting Principles
• Rationalize top-down and bottom-up forecasts with human intelligence.
• Stratify SKUs on the basis of demand and demand variability to determine:– forecastability– forecasting model
• Use best-fit model to predict future demand incorporating overall and seasonal trends.
Forecasting Principles
• Reduce replenishment lead times to reduce the overall forecast error.
• The enemy is forecast error and reaction to it - let’s do everything within our control to reduce the forecast error.
• The barriers to forecast accuracy include bias, ignorance, poor data, and denial.
Typical Demand Patterns
Selection of Statistical Tools to Match Demand Behavior
Revenue Management
What’s all about it?
• Solving the dichotomy of inventory and pricing
• Inventory decisions are made at the individual, unitary level
• Pricing decisions are made at the segment, global, multi-purchase level
Revenue Management System
• Capacity management– Fleet utilization
• Pricing– Corporate revenue (consumer’s sensitivity to
price)
• Reservations control– Revenue maximization
Demand Management Principles
• Logistics strategy and customer service aligned with global logistics conditions
• Segmented Logistics Service Policy by Location & Conditions (Expectations)
• Consistent Use of INCOTERMS and Standard International Contracts
• Multilingual/Multicurrency/Multi-time Zone Order Entry Systems & Order Status Communication
Global Customer Service World-Class Principles
• Electronic Commerce / EDIFACT/EFT/ Internet/International Faxing
• Back order, partial orders, pricing and returns policy and procedures segmented by country/customer/SKU
• CS aligned with other GL processes (inventory management, procurement, manufacturing, transportation and warehousing)
• Pricing aligned with Service Policy
3. Global Customer Service World-Class Principles
• Consolidation of all global logistics functions under one umbrella
• Accurate sales forecasting• Vendor partnerships• Proper documentation• Flexibility to deal with special market situations• High knowledge about international finance
options and work with an expert bank in GL