MS -09 Question 3

Suppose you are a sales manager of an organization manufacturing consumer durables. How will you analyze the demand? Explain how will this demand contribute to the business decision-making?
CONSUMER DURABLES MARKET DEMAND
-are a unique set of consumers' item.
-they are often seasonal items [ festive or climate]
-they are high ticket items
-the buying decisions are often difficult to predict
-service/ warranty is a key factor in buying.
-financial service too plays a key part in selling.
-sales are influenced by the growth in economy.
-sales are influences by consumers confidence in the economy.
-sales are influenced by the discretionary income also.
etc etc
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STEP 1
DEMAND FORECAST FOR THE PARTICULAR TYPE OF DURABLES.
Delphi METHOD.
The Delphi technique helps to capture the knowledge of diverse experts while avoiding the disadvantages of traditional group meetings. The latter include bullying and time-wasting.
To forecast with Delphi the administrator should recruit between five and twenty suitable experts and poll them for their forecasts and reasons. The administrator then provides the experts with anonymous summary statistics on the forecasts, and experts’ reasons for their forecasts. The process is repeated until there is little change in forecasts between rounds – two or three rounds are usually sufficient. The Delphi forecast is the median or mode of the experts’ final forecasts.
The forecasts from Delphi groups are substantially more accurate than forecasts from unaided judgement and traditional groups, and are somewhat more accurate than combined forecasts from unaided judgement.
Judgmental Decomposition METHOD.
The basic idea behind judgemental decomposition is to divide the forecasting problem into parts that are easier to forecast than the whole. One then forecasts the parts individually, using methods appropriate to each part. Finally, the parts are combined to obtain a forecast.
One approach is to break the problem down into multiplicative components. For example, to forecast sales for a brand, one can forecast industry sales volume, market share, and selling price per unit. Then reassemble the problem by multiplying the components together. Empirical results indicate that, in general, forecasts from decomposition are more accurate than those from a global approach . In particular, decomposition is more accurate where there is much uncertainty about the aggregate forecast and where large numbers (over one million) are involved.
Causal models METHODS.
Causal models are based on prior knowledge and theory. Time-series regression and cross-sectional regression are commonly used for estimating model parameters or coefficients. These models allow one to examine the effects of marketing activity, such as a change in price, as well as key aspects of the market, thus providing information for contingency planning.
To develop causal models, one needs to select causal variables by using theory and prior knowledge. The key is to identify important variables, the direction of their effects, and any constraints. One should aim for a relatively simple model and use all available data to estimate it . Surprisingly, sophisticated statistical procedures have not led to more accurate forecasts. In fact, crude estimates are often sufficient to provide accurate forecasts when using cross-sectional data .
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STEP 2
COMPANY SALES FORECASTING FOR COMPANY MODELS.
-FIELD SALES INPUTS BY TERRITORY.
-TIME SERIES PROJECTION.
-SALES FORECASTING BY PRODUCT MANAGERS,BASED ON
THE MARKETING INPUTS.
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STEP 3
THE RESULTS OF STEP 1 AND STEP 2
WOULD GIVE
1.MARKET SHARE FORECAST.
2.SALES FORECAST - VOLUME UNITS/ DOLLARS.
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Explain how will this demand contribute to the business decision-making?
FOR BETTER BUSINESS DECISION MAKING
THE DEMAND ANALYSIS MUST COVER MOST OF
THE IMPORTANT ELEMENTS IN THE BUSINESS MANAGEMENT.
Demand Forecasting tackles four troublesome areas that, if not adeptly managed, can undermine the validity of a company's DEMAND forecasting and PLANNING processes.
Demand cleansing. Promotions, markdowns, weather and entry errors are just some of the factors that can distort your forecasts. Demand Forecasting has built-in demand cleansing so that forecasters won't be misled by these anomalies.
Seasonal profiling. How do you account for seasonal curves? Demand Forecasting helps you identify trends and seasonal patterns to get a clear picture of the selling curve for a specific time period, product and location. Seasonal profile management in Demand Forecasting automatically accounts for seasonal curves related to moving holidays, has advanced profiling science that selects and assigns the best profile from multiple profile/aggregation iterations and can optionally do an automatic refresh of profiles just before a SKU comes into its next season.
Demand Forecasting. Whether initializing a forecast for the first time, re-initializing after a structural change in demand history or periodically updating the forecast based on recent demand, Demand Forecasting uses our Universal Forecast Method™ that dynamically senses demand and adapts the proper forecasting components from multiple forecast methodologies to fit the demand signal that gives the best forecast.
Exception management. Without an efficient, proactive approach to resolve forecast errors, managing exceptions can be time-consuming and costly. Our Advanced Exception Management gives you the flexibility to adjust the logic and business rules that govern the creation and management of exceptions. This tool improves productivity by enabling automatic detection and self-correction of many problems.
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WHILE DEMAND FORECASTING/ PLANNING,
CONSIDER
Multi-Channel Planning ,
that gives you enterprise-wide visibility to what's happening in each channel.
Multi-Channel Planning greatly expands your profit potential because multi-channel shoppers spend four times more than single-channel shoppers. Capitalizing on a multi-channel strategy, therefore, is essential to the health of every business.
But that's tough to do when senior executives, lacking a holistic view, have to review performance to plan on a channel by channel basis, or lack the tools to manage individual channels effectively. Focusing on each channel often obscures focusing what is happening at the enterprise level. For example, management may not detect that customer service improvements in one channel are eroding customer service in another channel, or that a hot seller in one channel causes another to be out of stock.
Now, with one solution, you can plan and track individual channels and see a consolidated plan for all channels so you can effectively manage inventory at an enterprise level. Multi-Channel Planning's flexibility combines channels' specific structures, attributes and planning metrics with the ability to analyze and plan across channels when you need to.
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WHILE DEMAND FORECASTING/ PLANNING,
CONSIDER
Financial Planning: Reconciling Goals across your business
this approach delivers these key benefits to the business:
Gain enterprise-wide visibility to product information. You can plan and forecast sales and inventory requirements across multiple levels of the category hierarchy, all the way down to the item level.
Maximize productivity. The solutions are easy to use with fast response times Your planners will be able to concentrate on planning and analysis instead of data gathering, data entry and data validation.
Get rapid results. The solutions can group, seed and reconcile plans dynamically for maximum, unconstrained planning flexibility.
Increase sales and margins. Now you have the means to react quickly to changing customer needs and ensure you have the right product, at the right price, in the right channels at the right time.
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WHILE DEMAND FORECASTING/ PLANNING,
CONSIDER
Assortment Planning: Completing the Triple Play
this approach helps to align the organization's assortment strategy with its financial goals.
Properly executed, enterprise-level planning and budgeting invariably involves a great deal of top-down and bottom-up collaboration. -provides structures, views and measures specific to each demand channel's planning process. Then they align plans across channels, integrate key performance indicators and reconcile plans with corporate objectives.
Assortment Planning ensures you achieve the right mix of products for your customer in every channel and category.
The solution enables you to build and manage assortments using unlimited attributes, taking into account space capacity, display criteria, open to buy and customer preferences. Any changes to the assortment are automatically reconciled to attribute mix targets and financial goals.
THIS APPROACH HELPS TO
Manage the end-to-end process of building, managing and planning assortments for new and existing products (and their variations)
Keep up with assortment hierarchies, including start and end dates and unlimited assortment information
Track attribute mix versus target
Analyze best sellers from previous or similar assortments
Plan unique assortments to accommodate each location's specific situation
Plan placeholder and proxy items with like history
Plan and track items using multiple measures and versions and reconcile back to financial goals
Plan by average store, cluster or store in your retail channel
Plan by campaign, book or media drop for your direct channel
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WHILE DEMAND FORECASTING/ PLANNING,
CONSIDER
Item Planning
THIS delivers these benefits:
Gain enterprise-wide visibility to product information. You can plan and forecast sales and inventory requirements across multiple levels of the product hierarchy, all the way down to the SKU level.
Maximize productivity. The solution is easy to use with fast response times. Your staff will be able to concentrate on planning and analysis instead of data gathering, entry, grouping and reconciling.
Get rapid results. Group, seed and reconcile plans dynamically for maximum, unconstrained planning flexibility.
Increase sales and margins. Now you have the means to react quickly to changing customer needs and can ensure you have the right product, at the right price, in the right locations at the right time.
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WHILE DEMAND FORECASTING/ PLANNING,
CONSIDER

Promotion Planning: Ramp Up Profits By Slashing Errors
Promotion Planning gives you end-to-end control of every step in the process:
Forecasting. Initializes promotional forecasts using raw historical sales, eliminating the need for pre-existing promotion history.
Setting up assortments. Integrates with Assortment Planning to select, plan and manage different promotional product assortments for various locations.
Maintaining data. Supports promotion-specific attributes and measures, including page number, display fixture, offer and price zone.
Fine-tuning the forecast. Uses various "what-if" simulations to test strategies.
Building channel-specific promotions. Tracks data based on each channel's unique criteria.
Gaining visibility. Consolidates plans for analysis and purchasing across channels.
Managing promotion information. Uses a central repository for events, products, vendors and locations.
Monitoring item demand. Automatically updates forecasts based on actual performance data.
Maintaining optimum inventory. Automatically feeds orders to REPLENISHMENT SYSTEM.
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WHILE DEMAND FORECASTING/ PLANNING,
CONSIDER
Store Clustering:
Your planning process takes into account demand forecasts, top-down financial goals, bottom-up product plans, assortments and multiple channels.
What's missing? The customer! DEMAND planners are looking for ways to plug customer demographics and attributes into their forecasts, especially promotion and assortment plans.
Store Clustering enables you to develop plans that are truly aligned to your customers' preference, no matter where they shop. Without an army of planners, you'll be able to create plans that group similar locations by performance, size, climate, customer demographics, store format or other measures or attributes. This means you can stock each location in the cluster with merchandise generating the highest potential profits.
Provides flexible location attributing that can be managed within the solution itself for consistency and accuracy
Enables users to copy, edit and regenerate clusters as the business changes
Supports new stores so you can cluster based on like history
Interfaces with ASSORTMENT PLANNING so that you can build and manage assortments using unlimited attributes
Interfaces with PROMOTION PLANNING to streamline the planning and execution of promotional events
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WHILE DEMAND FORECASTING/ PLANNING,
CONSIDER
Inventory Optimization: Get It Right the First Time—And Every Time
Even small variances in inventory can have big repercussions in your supply chain. Caught with too little and you have rush charges, express delivery fees and unhappy customers. Order too much and you increase costs and risk write-offs for obsolete or expired goods. A view of your inventory across all channels ensures that your goods are where they're needed—not forgotten in a warehouse or reserved for stores while your Internet customers receive out-of-stock messages.
If inventory issues keep you from doing the best for your customers and your bottom line, Inventory Optimization can help you get it right, every time:
Replenishment—Profitable replenishment is a strategic advantage. Selling generates revenue, but smarter replenishment generates profit. Turn over inventory faster by ensuring you have what you need, where you need it, when you need it.
Multi-Echelon—Manage forecasting and replenishment across all your distribution channels from one application.
Vendor Managed Inventory—Share your inventory data with suppliers so they can time shipments and manage production—and you can please customers.
Collaboration Gateway—Give valued partners access to inventory, replenishment events and other specific data involving goods they sell to you or buy from you.
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WHILE DEMAND FORECASTING/ PLANNING,
CONSIDER
Order Lifecycle Management: Streamline the Order, Fulfillment and Returns Process
Distributed Order Management—Keep your supply and customer demand in profitable balance. A global view of inventory—at the supplier, in transit or at the warehouse—combines with cross-channel order reporting to enable you to deliver what your customers want, when they want it. Satisfy demand using the full supply pipeline by diverting in-flight inventory to where it's needed most: directly to customers, directly to stores, or to the appropriate distribution center based on real-time inventory positions. Manage inventory across channels by creating virtual divisions in the Distributed Order Management layer, alleviating cross-channel inventory complexity from distribution center operators.
Reverse Logistics Management—Make returns efficient, accurate and easy. Capture customer information, track return reasons, and automatically select the optimal mode of transportation to make returns a source of valuable customer and quality information. Automate vendor rules and streamline return-to-vendor credit process. Improve vendor buyback, reduce cycle time and improve open-to-buy.
Store/Customer Gateway—Let customers and stores place, track and confirm their orders on line, giving you proof of receipt, opportunities for feedback—and happier customers.
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WHILE DEMAND FORECASTING/ PLANNING,
CONSIDER
Transportation Lifecycle Management: From Bidding to Billing, See Where You Are and What You Need
Keep on Trucking... or Shipping or Flying on Time and within Budget
Transportation Procurement—From single lanes to entire networks, manage your bid process entirely online to obtain the right carriers, right modes at the best price.
Transportation Planning and Execution—Optimally manage all your transportation activities so you can coordinate, redirect and stay on schedule. Deliver superior service to your customers with full visibility and event management capabilities.
Logistics Gateway—Share critical data in real time to keep all your transportation partners working together. Enable communication with suppliers and carriers to request shipments, provide updates and settle financial concerns.
Fleet Management—Manage and optimize all assets of both private and dedicated fleet operations including drivers, tractors and trailers.
Audit Payment and Claims—Pay for only the services you used at the price you contracted. Identify overcharges, duplicate bills and other errors immediately. Manage both cargo and detention claims with carriers and suppliers.
Appointment Scheduling—Avoid charge-backs from Hours of Service violations and staff your warehouse appropriately by encouraging carriers to schedule deliveries online.
Yard Management—Know trailer positions and status instantly. Schedule arrivals by dock and reduce loading and unloading time.
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WHILE DEMAND FORECASTING/ PLANNING,
CONSIDER
Distribution Management: Control and Collaboration from Supplier to Customer
Solutions for Every Link in a Competitive Supply Chain
Warehouse Management—Fine-tune your facility with a more efficient layout, well utilized resources, streamlined inventory and flawless order fulfillment.
Slotting Optimization—Match slots to demand, weight and other product characteristics for faster, more accurate picking resulting in improved productivity.
Labor Management—Standardize and track workforce performance throughout your operation. Reward quality and safety, boost productivity and forecast with better precision.
Billing Management—Assign and manage charges for virtually any warehouse event for a full understanding of your costs and profits. Track activities by unit or client.
Supplier Enablement—Extend powerful supply chain capabilities to your suppliers, and automate communications and record-keeping—all online.
Hub Management—Give hubs and providers instant visibility of orders, shipments and inventory. Streamline transport and inventory by managing partner-to-partner shipping.