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**CGT 03-06 SCP Matrix 2/27/06 5:01 PM Page 2 Ü°ÞVëÊU nääÇÈÓxÓäÇ UÊ ÜÜÜ°}ÌÞ°VÉÃV«ÜÀÃÊ ,iµÕiÃÌÊ>ÊvÀiiÊ ÊÌ`>ÞÊ>Ì iViÊ>ÊÃÕ««ÞÊV >Ê iÀÊÜÌ Ê}ÌÞ° > INSIDE SUPPLY CHAIN PLANNING viÌÛ `iÌ« }ÀÜÌ Ì«i `ÀÛi Ì ivviVÌÛiÞ ` v Õ Ã /ÀiÃÕÀVið / v Ìà ÜÌ ÕÌ vvViÌÞ > ,"° >` «iiÌ>Ìà vÀ THE FUTURE OF SUPPLY CHAIN PLANNING , Ìi ÞÌ°,>«`Þ ÃÞÃÌið - Ì iÀ >` ,* à v> ÞÜÀà >ÞÜÌ >ÃÞ ÜÀð }ÌÞ >] v iÃÌ Industry experts weigh in on pressing issues, including bridging the gap between planning and execution, nääÇÈÓxÓäÇ leveraging demand insight and using supply chain planning as a catalyst for collaboration ÜÜÜ°}ÌÞ°V Must supply chain planning and execution be tightly coupled the market opportunity. Once in-season, planning strategic level and targeted towards enhancing brand when consumers step in a store, they are able to find Ìi° LÌÌ >` to meet the needs of a demand-driven supply chain? needs to be synchronized with execution to ensure equity. Thus, both sets of data are valuable and can the products that they want at the price that they want. BALACHANDRAN - Supply Chain Execution usually refers product flow and operations can be tuned as real-time drive completely different sets of decisions. A box of cereal spends more than 60 days in the supply i Ì«V ÌiÌ« Ì i LÌ «>VÌ Ì >Ì `iVÃà to transportation and warehouse management demand signals are captured. As an example, if a chain. Retailers and brand owners need to work capabilities, which are responsible for carrying out the promotion begins to trend higher than planned, How are manufacturers utilizing SCP capabilities to col- together to reduce this total dwell time. Manugistics is LiÌÌiÀvÀi` >i Ì ÞÕ >Ü >` plans and customer requests on an ongoing basis. This transportation, allocation, distribution and labor may laborate with their retail partners? helping manufacturers make better sense out of the « iÜÀ]LÌ«ÀiÌÀ`iÀà «iÀviVÌ LÃÌ iÌÜÀ] Õ««Þ à functionality usually resides outside an ERP system. all need to react. The more tightly coupled, the better BYRNE - Manufacturer/retailer collaboration is in its POS information that they receive and ensure that their Supply chain planning refers to the forecasting and the opportunity to quickly adapt and respond. infancy. Most collaboration tools are used for internal clients' stores are always stocked. Some of our retailers ÌÛÌi]ëÌ>`i>``ÀÛi > ÃÕ««ÀÌ VÌÛÌiÃ] > inventory deployment functions, which again reside collaboration, with the idea that eventually they may be are collaborating with their transportation service outside ERP. Given that the chances of meeting targets What type of demand insight best complements supply used for inter-company collaboration. The biggest providers to guarantee good service and ensure the «iiÛi v}> Õ«ÞV > ÃÕ««Þ }L> v ÛiÜ V«iÌi > improve with plan quality, it is critical that wherever chain planning functionality? problem is the lack of an automatically-generated, product gets to the shelf. Our clients leverage possible, execution level constraints such as BURSA - CG companies are clearly focused on accurate, short-term forecast that both sides can agree Manugistics solutions set to collaborate on promotions >>iiÌV«LÌi Ì}Û ÞÕ }Ûi Ì >Ì V>«>LÌià >>}iiÌ transportation lane capacity, labor availability, etc., is becoming more demand-driven. Leaders are gaining to as a starting point. This is what stalled CPFR, too and other events so that the entire supply chain is >Õi«ÜÀÕ «iÀvÀ>Vi «ÜiÀvÕ i>ÌÕÀi v taken into account when creating the plan. This additional demand insight to more effectively plan much time spent evaluating and reconciling predicted synchronized. Some customers are also collaborating concept of constraint-based planning ensures that the promotional strategies and understand customer-level demand, too little on joint planning. with their suppliers on suppliers’ capacity and their °}Ì >i -ÕÌÃÒ 6Þ>}iÀ }ÌÞ ÀvÌ° « plans created are indeed feasible and executable. A (and to some extent consumer-level) consumption CAMPBELL - The foundation for strong collaborative ability to deliver products as the demand changes. closed loop between planning and execution is required patterns. Additional demand insight is gained through relationships is here today, and it's affordable. There is MATACUNAS - We’re seeing a resurgence of ÕiÃvÀÃLvÀ ÞLÀ «ÞÕÀ Õ« LÕÀ Ì iÞ LivÀi vÀià LÕÃiÃà to ensure that challenges and constraints that arise granularity in the demand planning and forecasting no barrier to entry for any enterprise that has manufacturers managing their respective inventory in during the execution of a plan are captured and process, including customer-level analysis of point-of- >>iiÌÃÌ Ì Ã«ÀiÛiÌ i«Ã Ì >Ì ÃÕÌ >>}iiÌ factored, where possible and sensible, into the next sale (POS) and VMI data along with improved planning Àà LÀÌÛ Õ«ÞV > ÃÕ««Þ V>LÀ>ÌÛi Ì i /ÀÕÃÌ plan. Understanding the trade-offs between supply and and tracking of new product introductions. demand and the levers available to manage and fulfill Manufacturers should collaborate with key customers demand profitably can only be best understood when and suppliers to confirm demand patterns and fine planning and execution are closely linked. Finally, a tune promotional plans and inventory policies. To more loosely coupled interaction is recommended leverage these important trading partner relationships, between planning and execution to allow for flexibility you must understand customer-level demand. and business process changes over time. According to AMR Research, a 5 percent improvement BURSA - In the consumer goods (CG) industry, gaining in demand forecast accuracy drives a 10 percent demand visibility should be the highest priority. The improvement in perfect order performance. That’s a win second priority is creating a supply chain network that for every member in the supply chain network. can quickly and flexibly meet rapidly changing market BYRNE - The most complementary type of demand demand. We have new synchronization challenges with insight is the retailer's promotional plan. POS is Mohan Balachandran, Vice Karin Bursa, Vice President Robert Byrne, President President, Industry Marketing, of Marketing, Logility and CEO, Terra Technology globalization extending the CG supply chain and overrated as a "fix" for SCP forecast error, although it is i2 Consumer Industries customers demanding greater responsiveness, more extremely useful in new product situations when there frequent deliveries and higher compliance. are likely to be major discrepancies between orders Synchronizing the entire supply chain network — from from retailers and actual consumption. demand planning to order delivery — becomes critical CAMPBELL - Every industry is different. Soft goods are to maintaining margins, delivering on product ruled by finicky fashion trends, while hard goods can innovations and providing great customer service. As rely on sales histories more reliably — whether seasonal CG companies become more demand-driven, supply or promotion-driven. If your planning system cannot chain planning data needs to be translated into an deal with these two types of very different behavior — Project10 2/21/06 4:36 PM Page 1 Page PM 4:36 2/21/06 Project10 Demand 2/17/06 11:05 AM Page 1 Page AM 11:05 2/17/06 Demand achievable execution plan for procurement, demand at the shelf and a solid demand history — then SPECIAL PULL OUT SECTION manufacturing and logistics. Although many companies you have not selected one of the best-of-breed improved their silos of automation, the real benefits applications for your forecasting and demand planning Project1 2/21/06 8:41 AM Page 1 SUPPLY CHAIN PLANNING 2006 come from bringing supply chain planning and functions and you will be saddled with two systems or execution closer together. This is what’s driving many just plain miss golden opportunities all together. The Ronald Kubera, Senior Vice Mike Matacunas, Vice President .BOVHJTUJDT SBOLFE CG leaders to invest in improving Sales & Operations most effective compliment to best practices in SCP have Mike Campbell, President, Demand Management Inc. President for Consumer Goods, of Product Strategy, JO $(5T 3FBEFST $IPJDF "XBSET Planning (S&OP) processes. When S&OP is done well, everything to do with flexibility and understanding the Manugistics Manhattan Associates t 0WFSBMM 5SBOTQPSUBUJPO .BOBHFNFOU 4PMVUJPOT demand matches supply in a profitable operational plan basics. We have seen cases where a demand algorithm t $VTUPNFS 4FSWJDF GPS 4VQQMZ $IBJO 1MBOOJOH and yields lower inventories, better customer service, was a programmer's dream, but costly to the company higher revenues and improved margins. attempting to implement it. You can't go wrong by something to offer the marketplace. The future gains in retailers. As a result, manufacturers are beginning to BYRNE - Being a demand-driven consumer products using only those algorithms that are known to work. SCP efficiencies will affect the two ends of the supply deploy more advance supply chain planning company requires you to compress the planning The improvements in this area represent tiny chain: more rapid innovation in product development, capabilities to optimize the amount of inventory and horizons, moving at least to forecasting the near-term increments, and no one wants to be the “test” case for and more rapid turnaround in taking action on current flow of product while satisfying their market every day as well as deploying and scheduling daily. those that claim theirs is “the next big innovation.” product sales. It is imperative that sales and marketing commitments. Coupled with the fact that the increase Focusing on the very near-term means that data should Master the fundamentals. That's where the bottom-line be involved with the customer in the same type of face in globalization has added variability to distribution, be as current and correct as possible, so having your improvements are going to come from. time I mentioned earlier. A recent survey by Capgemini manufacturers recognize the competitive advantages of systems synchronized is mandatory.

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