The Impact of Forecasting Improvement on Return on Shareholder Value
John T. Mentzer; Journal of Business Forecasting

Improving Salesforce Forecasting
Mark A. Moon and John T. Mentzer; Journal of Business Forecasting

Benchmarking Sales Forecasting Management
John T. Mentzer, Carol C. Bienstock, and Kenneth B. Kahn; Business Horizons

Webcast: Three Keys to Successful S&OP
Wednesday, October 26, 1pm Eastern, 10am Pacific
Principal Speakers
Tim Vaio, Managing VP,
Hitachi Consulting
Seema Phull, Director Process & Technology,
Enterasys Networks
Click to Register

Conference:
The Dynamic Supply Chain-- Strategies for Implementing Sustainable Competitive Advantage
Nov 17-18, NY
Hear Glen Margolis, Founder & EVP Steelwedge Software, Carol Ptak, Former APICS CEO and Author, Others
Learn more

Previous Webcasts--
State-of-the-Art Sales Forecasting Management
September 13, 1pm Eastern, 10am Pacific
Principal Speakers -
Professor J. Tom Mentzer, University of Tennessee
Todd Jones, Sr. Director
Sales Operations, QLogic
Click here to view recording

Forecasting and Consensus Planning in a Rapidly Changing Environment
June 15, 2005, 1pm Eastern, 10am Pacific
Principal Speaker -
Christine Pfefferle, Director of Global Demand & Order Management, Tellabs
Click here to view recording

Extending SAP for Global, Integrated S&OP
May 25, 2005
Stu Reekie, Air Products
Click here to view recording

Rough Cut Supply Planning: Can you Deliver Against the Demand Plan?

By Anil Gupta, Principal, Applications Marketing Group

Your planning organization has used a very sophisticated method for creating a demand plan. You feel very good about expected accuracy of the plan. Your director of finance believes that the organization can meet the quarterly revenue and margin targets if the demand plan can be executed well. Your challenge now is to proactively and quickly identify any key material and capacity constraints that would prevent you from delivering against the demand plan.

This process, called Rough Cut Supply Planning, also forms the basis for creating an allocated demand plan for certain products in a timely manner, and gives you ample time to revisit your assumptions to identify alternate demand generation scenarios to make up for any revenue loss from allocations. This brief reviews how leading companies are addressing rough cut supply planning today.

The Rough Cut Supply Planning solution bridges the gap between a consensus demand plan and constrained supply by providing an ability to perform rough-cut capacity planning on key resources and consumption analysis on key components and resources, so the operations organization can create a feasible supply plan. Key requirements for rough cut supply planning technologies include:

• Ability to run the supply planning process quickly
• Realistic delivery dates for key components that are expected to be short
• Real time visibility into available capacity
• Identification of potential shortages in key material and capacity
• Ability to create alternative scenarios and identify most likely scenario

Once a realistic supply plan is created based on current constraints, a Supply and Operations Planning (S&OP) meeting can become a catalyst for identifying tactics to address potential shortfalls in revenue/margin due to inability to deliver on some aspects of the demand plan.

The rough cut supply plan is a multi-step process.

1—In the first step, an unconstrained planning run identifies all net component requirements.

2—Then the suppliers are contacted (via a supplier portal) regarding their ability to deliver against key material requirements in the required quantity in the right timeframe to ensure that demand for key components can be met and if not, what is the expected quantity that can be secured for such components. Hence rough cut supply planning technologies should come with an integrated supplier portal, with integration architecture to easily replace it with company's standard supplier portal, if they have one implemented. Supplier collaboration ensures that planners can get a realistic availability view into key components, especially for components that could be under ‘allocations'

3—Then the planner runs the planning process with material and capacity constrains to develop a rough cut constrained supply plan and identify potential issues. Scenario planning helps refine the plan, including considering alternative components, identifying other sources of supply and tweaking inventory policies.

4—Once the plan is finalized, the selected rough cut supply plan and various issues are brought before the S&OP process.

With consensus demand planning and rough cut supply plan, the operations organization is setup very well to identify tactical plans to address the potential shortage issues and adopt a plan that meets the financial, operational and sales objectives. The organization gains the discipline to become predictable in delivering against its financial plans and meeting/beating its on-time order delivery targets, leading to happy customers and investors.

Anil Gupta is a principal at The Applications Marketing Group, Atherton , CA .
He has specific expertise in ERP, supply chain and analytics applications.
He is also a research advisor to Ventana Research, an industry analyst firm, in IT performance management. Anil has been a VP of Strategy and/or Marketing of enterprise software companies such as Baan, Niku, Evolve and Oracle.
He can be reached at www.applicationsmarketing.com