Question

identify and discuss the information necessary to balance supply and demand in a manufacturing planning and control environment. explain collaborative planning, forecasting, and replenishment ( CPFR and how it assists and impacts demand management.

Answer 1

1. Necessary information to balance supply and demand in manufacturing process

Current market and consumer demand

• Actual demand: Recent and current
• Future demand: Outlook/anticipated demand and basis of shifts, forecast error
• Performance: Fill rates, lead-times, delivery date reliability
• Orderbook: Orders on hand/backlog status as future demand indicator
• Macro inputs: GDP and sector/geo-specific indicators, actual and forecast
• Micro inputs: Collaboration-based customer forecasts

Financials

• Dollarized data: Sales, operating costs, gross profit, inventory
• Trends and mix: Past, present and outlook

Operation

• Bills of materials, substitution rules, replenishment lead times, allocation rules
• Plants, DCs: Capacity utilization, product trends, overtime, constraints, planned outages
• External supplier materials, capacity

With the above information construct models targeting specific aspects of supply-demand balancing-

• Network cost model, with ability to test short-term changes. Optimizer functions (available, for instance, as add-ins to Microsoft Excel) can provide the ability to quantify ‘what if’ effects of shifting a supply source to meet evolving demand.
• Demand outlook incorporating new products, complexity levels and large orders. Forecasts can be adjusted using complexity factors, for instance, to properly reflect the challenge of producing more sophisticated product lines.
• Dollarization of lost revenues (and margin) and delta to optimal, current and trend. Quantifying opportunity cost is key to rational decision making and needs to be incorporated in the analysis of alternative supply-demand solutions.
• Improved inventory management and statistical/discrete integrated forecasting tools. Mid-sized companies should review their inventory planning tools to ensure they are using up-to-date parameters, applying the best statistical techniques and building in the effects of specific large orders.

2. CFPR

In the 1990s, big retailers (beginning with Walmart) and their consumer goods partners identified unmet potential in forecast accuracy, supply chain coordination, and general supply chain visibility. Their awareness gave rise to Collaborative Planning, Forecasting, and Replenishment, an end-to-end supply chain scheme designed to close the loop in the consumer-goods-to-retail supply chain.

CPFR is a business practice that combines the intelligence of multiple trading partners in the planning and fulfillment of customer demand.

Wat it does:

• Links sales and marketing best practices to supply chain planning and execution processes

• Objective is to increase availability to the customer while reducing inventory, transportation and logistics costs

Stages of CPFR

Every supply chain and associated collaborative planning model is different. That said, researchers at NC State’s Poole College of Management laid out a four stage general guide:

1. Strategy and planning
2. Demand & supply management
3. Execution
4. Analysis