Demand Planning and Inventory Optimization

Day One

7:45AM to 4:45PM

07:45 – 08:00 am Registration

08:00 – 08:45 am

• Introduction by Corporate Sponsor
• Global Demand Planning and Material Management Strategy
• Importance of workshop
• Introduction to the Four-Day Program by Mark Chockalingam

08:45 – 09:45 am Group Introduction

09:45 – 10:00 am Coffee Break

10:00 to 12:00pm Demand Planning and Management

• Introduction to Demand Planning- What, Why and How?
• The Service – Cost – Balance Model
• Key components of demand
• Local vs. Strategic Demand
• Revenue and Margin perspective and the Stock Holder Value Model
• Profitability vs. Productivity
• Cash-to-cash Cycle and Financial Analysis
• Operational efficiency and Profitability
• Key Concepts in Demand Planning
• Forecast Horizon, Buckets & Periodicity

12:00 to 1:00pm – Lunch

01:00 – 2:00pm Case Study

• Assignment of Individual case study
• Formation of three to four person teams

Description of case study

• Case study of operations at a warehouse
• Management’s pain point and how to scientifically control it
• Attendees will be get transaction data of 50 SKUs from one warehouse
• Submit case study solution: Calculation and analysis of inventory parameters expected
• (Due by 8 PM on day three (By Email)

02:00 – 3:15pm Purpose of Inventory – Introduction to Inventory Management Principles – Developing the Service Strategy

Inventory Categories

• Direct materials
• Indirect Materials
• MRO OEM
• MRO Industrial

Inventory Strategies

• Make to Order
• Make to Stock
• Assemble/Build to Order
• Postponement
• Mass customization
• Engineer to Order

Purposes of inventory

• Buffering
• Hedging
• Decoupling
• Economies of scale

03:15 – 03:30 pm Coffee Break

03:30 – 4:30pm Demand Consensus Process

• Symptoms of a Fragmented Corporate Planning Process
• Bottom Line Effects of Fragmented Planning
• Sales & Operations Planning
• Demand and Supply Balancing
• Volume Planning
• Item Level Exceptions
• Service Planning Model
• Demand Planning vs. Demand Management
• Sales & Marketing Input
• Demand Consensus

Day Two

07:45 – 04:30 pm

07:45 – 08:00 am Recap of Day 1

07:45 – 08:00 am Toolkit for Materials Management

• Data Requirements/Analysis for Demand Forecasting
• Data cleaning challenges
• Graphical Review of Data
• Data filtering
• Structural Changes and data shifts
• Demand volatility
• Measuring volatility
• Central Tendency
• Co-efficient of Variation (CV)
• Outliers and Missing Data
• Process to Identify Outliers
• Outlier Correction

10:30 am – 12:00 pm Principles of Inventory Management

• why carry inventory?
• Elements of carrying cost
• Average Inventory
• Economic Order Quantity
• Purchase Quantity Discounts

12:00 pm – 01:00 pm Lunch Break

10:30 am – 12:00 pm Inventory Optimization

• Independent Demand vs. Dependent Demand
• Establishing Safety Stock & Reorder Point
• Max Min
• Reorder Point
• Dynamic Lot sizing
• Effect of lead time
• Effect of intermittent demand
• Cycle time
• Average Inventory
• ROP vs. EOQ
• Lifetime buys and pitfalls to avoid

03:00 pm – 03:15 pm Coffee Break

03:15 pm – End of day Work on Individual Case study

Day Three

8:15AM to 4:30PM

8:15 am to 8:30 am Recap of Day 2

8:30 am to 10:00 am Manage by Exception

• Product Segmentation for Forecast Modeling
• Volume Volatility Criteria to Segment SKUs
• Pareto Analysis of volume
• Measurement of Demand volatility using CV
• Process Flow for the Segmentation Strategy
• Classification using a 2x2 matrix
• Differential Modeling Strategy using segmentation

10:00 – 10:15aM Coffee Break

10:15 – 11.00 am ABC Classification for Inventory

• ABC analysis – Classification philosophy
• Pareto analysis of SKUs based on dollar usage
• Frequency of Usage – Excess, Obsolete and Slow-moving
• Alignment with product lifecycle
• Process flow for segmenting skus using the above techniques
• Example using a three dimensional matrix; ABC / Volume / Critical / Status: excess, obsolete

11:00 – 12:00pm Modeling and Graphical Decomposition

• Forecast Model
• Key Components of a Demand Plan
• Illustration of Demand components
• Demand Volatility
• Predictable and Unpredictable Volatility
• Understanding the components
• Trend
• Seasonality
• Cyclicality
• Forecast Modeling by Decomposition

12:00 – 1:00pm Lunch Break

01:00 – 3:15pm Introduction to Forecast Modeling

• Introduction to Forecast Modeling
• Qualities of a good Statistical Forecast
• Balancing between Model Fit vs. Robustness
• Ex-post forecasting for Modeling
• Optimal Model Selection using Diagnostics
• Time Series versus Multi-Variate Methods
• • First Order Exponential Smoothing Models
  • Holt Winters Models to model trend and seasonality
  • Baseline vs. event forecasting
• Forecast Modeling with software
• Forecast model examples with your dataset

03:15 – 3:30pm Coffee Break

03:30 – End of Day

• Work on individual case study
• Q & A with the facilitator

Day Four

8:15 am to 8:30 am Recap of Day 3

8:30 am to 10:30 am Work-site Inventory Management Techniques including Kanban

• Cycle Counting
• Need for timely / accurate on hand data
• Cycle counting process
• Determining the cycle count load
• Kanban systems
• Kanban & Pull systems concepts
• Determining Kanban container quantity
• Determining Kanban container safety stock
• Determining the total number of Kanbans
• Kanaban parameters: Min-Max, re-order point, and average inventory

10:30 am to 10:45 am Coffee Break

10:45 am to 12:15 pm Multi-echelon distribution

• Definition
• Common multi-echelon models
• Determining inventory location: hub or end of spoke
• Inventory in Multi-echelon Distributions
• Square Root Law of Inventory management
• Exercises

12:15 pm to 01:15 pm Lunch

01:15 pm to 02:30 pm Measurement and KPIs for Inventory Management

• SC Reliability
• Fill-Rate and On-time Delivery
• Order complete
• Flexibility
• Adaptability

• Inventory Accuracy
• Inventory Turns
• At-Risk

02:30 pm to 02:45 pm Coffee Break

02:45 pm to 04:00 pm Forecast Accuracy

• Forecast accuracy - MAPE, Bias and SKU Mix
• Calculation exercise
• Supplier Performance Measures
• Schedule Adherence
• Lead Time Adherence
• Relationship between Schedule Adherence, Customer Service and Inventory Availability

04:00 pm to 04:30 pm Feedback session