how to manage slow and fast moving goods in Demand Planning

[former_member615052]

Hi All,

Kindly let me know how to manage slow and fast moving goods in Demand Planning.

1. First how to detect slow and fast moving goods

2. which DP model to use

3. Any Best practice while dealing with slow and fast moving goods

Thanks

Arun

[Former Member · Accepted solution]

Hi Arun,

Demand Planning is purely a forecasting tool which cannot directly control

your inventory part.

Demand Planning indirectly brings your business to reduce the inventory

by providing quality forecast with the available history.

The managing slow moving and fast moving goods is mostly done at the

SNP level using safety stock techniques, deployment methods that you

are using.

Best practive is that you categorise your items into A, B and C with

A as fast moving, B as slow moving and C as non-moving items

Then, keep minium safety stocks, and more deployment horizons for

B class stocks, more safety stocks and more deployment horizons for

A class stocks and no values for C class stocks

Hope your query is answered

Regards

R. Senthil Mareeswaran.

[Former Member]

Arun,

There are two main concerns with forecasting slow moving goods. For fast moving, yes, trend, level and seasonality combined with a decent demand level gets you through.

So, either you don't have demand in the market for that product; if the product is not critical (like go/no go spare parts) I recommend just averaging out the demand over a period and going with that. Any errors incurred there won't have a significant business impact. On the other hand if it is critical, safety stock and/or contractual obligations come to play.

OR, if there is market demand but your market share is too low for whatever reason, then it gets tricky because you need a predictor variable(s) for which you have good knowledge off (such as CPI index, demand for related products, etc). The forecast is then done on the predictor variable(s) and the low market share applied to 'translate' the expected demand to the product in question. Unfortunately, the case of low demand/low market share I have no idea of how to implement it on SAP. Since forecasting is just the tip of the iceberg, it may pay to do it outside of SAP (say in Excel) and manually input it (unless the products are many and varied).

Hope this helps. Please let me know if this makes sense and/or applies to your question.

Rodrigo

[Former Member]

Arun,

There are two main concerns with forecasting slow moving goods. For fast moving, yes, trend, level and seasonality combined with a decent demand level gets you through.

So, either you don't have demand in the market for that product; if the product is not critical (like go/no go spare parts) I recommend just averaging out the demand over a period and going with that. Any errors incurred there won't have a significant business impact. On the other hand if it is critical, safety stock and/or contractual obligations come to play.

OR, if there is market demand but your market share is too low for whatever reason, then it gets tricky because you need a predictor variable(s) for which you have good knowledge off (such as CPI index, demand for related products, etc). The forecast is then done on the predictor variable(s) and the low market share applied to 'translate' the expected demand to the product in question. Unfortunately, the case of low demand/low market share I have no idea of how to implement it on SAP. Since forecasting is just the tip of the iceberg, it may pay to do it outside of SAP (say in Excel) and manually input it (unless the products are many and varied).

Hope this helps. Please let me know if this makes sense and/or applies to your question.

Rodrigo

[former_member266806]

Dear Reddy,

You need to tackle the issue in a different perspective. For very fast moving goods , have weekly forecasts and for very slow moving goods, use fortnightly or monthly forecasts.

Forecasting methods will depend on the past sales trend, seasonaility etc. A poduct , irresspective of being very slow or fast,may have sporadic sales figures.

Regards,

Samir Baruah

[Former Member]

Hi,

You can create a navigation attribute for the basic charac for product and you can assign the values A< B and C to it. The selections in interactive planning can be managed using the navigation attribute.

Regards,

Senthilrajan