Forecasting shipments to Distributors using APO Demand

[Former Member]

Looking for CPG companies with similar experiences while forecasting ….

In a market, you sell products to a small # of distributors, who in turn sell your products to retail store chains. 

Do you develop your forecast based on your shipment history to the distributors or do you pull the shipment history of the distributors to retail store chains into your system attempt to forecast based on the sell out from distributors to retail stores?  If the latter, how do you accomplish this if your demand planning software (APO Demand) is tied directly to your ERP (SAP ECC)?  Also, how do you account for the time phasing of when product will ship from your location to the distributor based on the shipments further down in the supply chain and how do you consider the effects of inventory at the distributor?

[Former Member]

Hello John,

I can see why getting shipment history for the distributor to the retailer could be appealing as you would see the rise in sales sooner rather than waiting to see a purchase generated from the distributor back to your company. However there are potentially a few issues :-

1) Is there a guarantee that the sales from the distributor to the retailer will generate a purchase request back to your company? What if the distributor changes their stocking policy or stocking levels?

2) How would you ensure a complete shipment picture? Instead of pulling the data from your own ECC system you would be relying on multiple feeds (one from each distributor) which will be more difficult to manage.

3) How do you verify the quality of the shipment data supplied by the distributors?

I can't give you a definitive solution but hopefully these comments will help.

Good Luck

Kind Regards

Alistair Glover.

[Former Member]

John,

I suggest that you will get more answers to questions if you

a. limit questions to a single topic

b. limit questions to topics that are relevant to SAP software, which is the subject of this forum

Do you develop your forecast based on your shipment history to the distributors or do you pull the shipment history of the distributors to retail store chains into your system attempt to forecast based on the sell out from distributors to retail stores?

Both.  Contrary to the implication of your question, CPG is not a single market, it is dozens of markets.  Even within a single product line one might select many different forecasting models and methods, depending upon a number of factors.

If the latter, how do you accomplish this if your demand planning software (APO Demand) is tied directly to your ERP (SAP ECC)? 

It depends upon how the business wants to manage the data.  Data can be pulled directly into DP or into ECC; using a number of different methods.

 Also, how do you account for the time phasing of when product will ship from your location to the distributor based on the shipments further down in the supply chain and how do you consider the effects of inventory at the distributor?

If you actually intend to plan the distributor's materials for him, then he has to supply the data to you.  This is not usually part of the demand planning cycle, but part of execution.  That being said, though, anything is possible in DP if the data is available.

In conclusion, if you have a specific business problem about SAP DP or SNP for which you would like guidance, please raise it.

Best regards,

DB49