Advantages of Implementing Demand Planning in APO

[Former Member]

Hi All:

One of our company's business units is exploring the possibility of implementing their Demand Planning in APO. Since their business closely resembles retail, they do not run MRP in ECC to replenish. Instead they do Kanban for replenishment. Hence they do not need Independent requirement in ECC.

The as-is forecast model is a simple spreadsheet that they use that is used for financial forecasting. They have a lots of SKUs and with spreadsheet aggregation and disaggregation is a night mare. Hence they have products sitting in their inventory, worth millions of dollars that has not been sold yet for a year. In essense the top-level forecast data has too many errors. They also use this to forecast how much of components they have to procure. Again, they have millions of dollars work of components sitting in our inventory.

So, they are looking to implement their DP in some other software. Since we have APO, APO could be a choice. But we have to justify the cost involved.

They will not need APO to send back IR back to ECC.

Followiing are the benefits we see:

1. Highly integrated with ECC and hence forecasting will be based on their Sales and invoice history.

2. Since their products are seasonal, APO can offer advanced forecast methods to forecast SKUs as accurately as possible.

3. Ease of use.

4. Right now, the spreadsheet is accessible to one user at a time and been shared thru emails. This will change with APO

5. They could use DP-BOM to forecast component and help reduce components inventory

6. An integrated system that will sent forecast to CO-PA on a monthly basis.

Can you guys help me with anything else that will benefit the business? Any input will be of great benefit.

[Former Member · Accepted solution]

Hi,

First, you must look at what you need in terms of knowledge and processes and then look for the platform to implement it.

I saw it happening many times, people moving from "simple" XLS spreasheets into far more powerful and sophisticated packages without paying too much attention to core requirements.

so, since you say your business is seasonal and you have plenty of overstock, you are probably buying/stocking in a pattern out of sinc with your market demand and your forecast is problably the monthlty average for the year.

Get your processes right (customer/market segmentation, seasonality analyis, trends, etc) and then look for a suitable platform. APO is a very good choice by all means but if you move from something simple (XLS) to that level of sophistication, you are likely to suffer in terms of organisational culture to adapt and to fully benefit from it. Otherwise you might get a lot of unfullfiled expectations in your new implementation and a direct hit on your business case to justify the cost.

Just a suggestion for a quick homework, there are some patches in MS Excel that would help you a lot to answer some of this questions.

Good luck,

Rodrigo

[Former Member]

Hi,

First, you must look at what you need in terms of knowledge and processes and then look for the platform to implement it.

I saw it happening many times, people moving from "simple" XLS spreasheets into far more powerful and sophisticated packages without paying too much attention to core requirements.

so, since you say your business is seasonal and you have plenty of overstock, you are probably buying/stocking in a pattern out of sinc with your market demand and your forecast is problably the monthlty average for the year.

Get your processes right (customer/market segmentation, seasonality analyis, trends, etc) and then look for a suitable platform. APO is a very good choice by all means but if you move from something simple (XLS) to that level of sophistication, you are likely to suffer in terms of organisational culture to adapt and to fully benefit from it. Otherwise you might get a lot of unfullfiled expectations in your new implementation and a direct hit on your business case to justify the cost.

Just a suggestion for a quick homework, there are some patches in MS Excel that would help you a lot to answer some of this questions.

Good luck,

Rodrigo

[Former Member]

Hi Narayanan,

APO DP has got the capabilitiy to aggregate or disaggregate demand.

It has great potential to plan demand based on the desired hierarchy level

It has got potential to plan based on past history and uses as demand

It has powerful statistical tools to exactly predict the demand based on

trend values, forecasting methods, seasonal and promotional values.

User friendly & interactively in usage in which many users can login

at the sametime and make changes.

Key performance indicators as per business are the benchmark.

Reduction in inventory, increased profit, Forecasting time reduction,

Increased forecasting accuracy, etc.,

It has got the potential to store lakhs of CVC data.

Regards

R. Senthil Mareeswaran.

[Former Member]

Hi,

before to begin: I don't really understand what you are saying: you say the forecast is not use for planning, however your think it is the cause of overstock... how can that be?

I understand the logic for componenents, but not for finish good here

Anyway, regarding your questions:

Of course DP will help you too, and the benefits you emntioned are good.

However I suggest you to do a bigger analysis of your business needs... it looks ot me that you will need more than DP.

You could use SNP to plan your finish good and components (or use a strategy such as planning at assembly level).

If your biggest challenges in inventory level then SNP is the tool that will give you a better visibility here.

I personnally think that DP BOM should be use only is specific cases. You better have to plan your component in SNP, which will be far more flexible.

In one sentence, I think that if you do decide for a DP implementation now, you biggest benefit should be: later on you will be able to use SNP for planning.

Well that is what I think....

Good luck for your challenges!

Julien