Demand Planning Process 

Purpose

This process describes each activity in the Demand Planning (DP) cycle. In general, you can assume that the order of the processes presented here is the order in which you should proceed through the DP cycle. However, since DP is represented as a cycle, not a linear path, you may decide to repeat certain activities or to proceed in a different order.

Process Flow

The following diagram depicts the DP cycle.

 

  1. Carry out all the steps needed to set up your planning area. The planning area is the basis for all activities in APO Demand Planning. It is a collection of parameters that define the scope of all planning tasks. The planning area is linked to the data mart. You load into the data mart the actual history (for example, bookings, shipments or billings) that wlíll be used to create the DP master data and generate the demand forecasts.
  2. Map the structure of your company (for example, regions, divisions, brands, products and customers) for planning purposes in the DP master data.
  3. Configure the layout of the planning screens for the different parties (departments, managers, divisions, and so on) who will participate in demand planning by designing planning books. Define macros to perform calculations, carry out tests, and warn you of exceptional situations.
  4. Define forecast models for time series forecasting, causal analysis and/or composite forecasting.
  5. Create a forecast of market demand using a top-down, middle-out, or bottom-up approach. Choose from a wide variety of forecasting methods and techniques.
  6. Forecast new products and discontinued products by applying lifecycle planning and "like" modeling techniques.
  7. Plan promotions and other events. Examples of promotions are free-standing inserts, coupons, discounts, product displays, trade shows, dealer allowances, coupons, contests, and advertising.
  8. Fine-tune the demand plan by adding management overrides and modifications.
  9. Reconcile the demand plans of different departments by merging the plans into a one-number, consensus forecast.
  10. Simulate different planning scenarios.
  11. Monitor exceptional or critical situations through the Alert Monitor.
  12. Make the demand plan available in SNP by releasing it. The demand plan is often unconstrained by any production or distribution restrictions. This step can be completed by either the demand planner or the SNP planner.
  13. Make the SNP plan available to DP by releasing it. The SNP plan takes into account any production or distribution restrictions. A comparison of the two plans could lead, for example, to the opening of a factory to meet demand in a new market region.
  14. Store the forecasts made at different times for a period.
  15. Update the actual data.
  16. Verify the accuracy of the forecast; for example, by comparing it with the constrained forecast from SNP, with actual data and with other demand planning versions that you did not release to SNP.
  17. Revise the master data to reflect the addition of new products, customers, and so on.
  18. Refine the forecast models in the light of knowledge gained from forecast accuracy checks. Add new models for new products and product lines.

Result

The result of Demand Planning is the demand plan.