Chapter 7 - Demand management Flashcards
What are the forecast errors?
Cumulative sum of forecast errors (CFE)
Mean squared error (MSE)
Mean absolute deviation (MAD)
Mean absolute percentage error (MAPE)
How can you balance supply and demand?
External balancing methods:
Change demand, change lead time
Internal balancing methods:
Production flexibility, Inventory
What can be the problems of achieving goals in demand management?
*Lack of coordination between departments.
*Too much emphasis on forecasts of demand, with less attention on the collaborative efforts and the strategic and operational plans.
*Demand information is used more for tactical and operational than for strategic purposes
Different demand management strategies?
Growth
Portfolio
Positioning
Investment
How can you balance supply and demand?
- External balancing methods:
Change demand: discount/lower price –> demand goes up
Higher price: demand goes down
- Internal balancing methods:
Balance production: example, skidoo
What are some forecast errors?
Cumulative sum of forecast errors (CFE)
Mean squared error (MSE)
Mean absolute deviation (MAD)
Mean absolute percentage error (MAPE)
What are the steps in sales and operations planning?
Monthly event in a corporation.
Step 1: Run sales forecast reports
Step 2: Demand planning phase (statistical forecast)
Step 3: Supply planning phase- “Can we meet the demand?” (management forecast)
Step 4: Pre-S&OP meeting (capacity planning)
Step 5: Executive S&OP meeting
What is meant with collaborative planning, forecasting, & replenishment (cpfr)?
For example collaborate with tier 1, tier 2, tier 3 suppliers and with retailers etc. If something changes in the supply chain, everybody can get information about that quickly. Using internet technologies retailers, distributors, and manufactures collaborate on operational planning.
What is CPFR (Collaborative planning, forecasting, and replenishment)?
A breakthrough business model for planning, forecasting and replenishment. Through this model, retailers, distributors, and manufactures can utilize available Internet-based technologies to collaborate on operational planning through execution.
Four major processes: strategy&planning, demand &supply management, execution, analysis
What are important aspects of the CPFR?
It includes the cooperation and exchange of data among business partners.
It is a closed loop process that uses feedback (analysis) as input for strategy and planning.
What is Integrated Fulfillment?
operates one distribution network to service both channels.
Advantages of this is that it has low start-up costs (feeding up the inventory) and existing network can service both.
Disadvantages of this is that the order profile will change with addition of internet orders. Would require a “fast pick” or broken case operation. Conflict might arise between a store and an internet order.
What is Dedicated Fulfillment?
both a store and an internet presence with two separate distribution networks.
Advantage is that it separates distribution network for store delivery and consumer delivery estimates most of the disadvantages of integrated fulfillment.
Disadvantage is duplicate facilities and duplicate inventories (same products but two inventories). Problems that can occur if you short on stock, which one are you going to fulfill?
What is Outsourced Fulfillment?
Assumes that another firm will perform the fulfillment.
Advantage is that it is a low start-up costs for the retailer to service the internet channel. Possible transportation economies.
Disadvantage is the loss of control over service levels. If the third place goes very busy, what place in priority does my customer have inside their facility? If you are a small client, they will probably help the bigger clients first. If my client contacts me and I have to contact the outsourced retail center my customer has to wait longer, and that is not the optimal costumer service.
What is Drop-Shipped Fulfilled?
Also called direct store delivery, vendor delivers directly to retailer, bypassing retailer’s distribution network. (For example, Walmart uses this type). Works best for products that have a short shelf life.
Advantages: Reduction of inventory in the distribution network. Vendor has direct control of its inventories.
Disadvantages: Possible reduction of inventory visibility. May get different information, the stores distribution system says one thing and store have another information coming from the manufacturer system. Which should you believe?
What is Store Fulfillment?
When the order is placed through the Internet site and sent to the nearest store for customer pick up.
Advantages is the short lead time to the costumer. Low start-up costs for the retailer. Returns can be handled through the store. Product availability in consumer units.
Disadvantages is reduced control and consistency over order fill. Conflicts may arise between inventories. Must have real-time visibility to in-store inventories. And the group that handling the order has to have access to this. Stores lack sufficient space to store product.
