supply chain management is an iterative
process that requires coordination and
collaboration across many departments
such as operations marketing sales and
finance companies of all sizes need to
match supply and demand as efficiently
as possible and this demo will examine a
consumer product goods company with a
six month planning period and see how to
create a more accurate demand forecast
and production plan before we start
let's look at the historical data
through December in IBM planning
analytics all of your plans budgets and
forecasts are created and stored in the
same application meaning all users are
working with the same data set creating
one version of the truth
changes to one plan will automatically
update and flow to other plans and
centralize business rules can be applied
to all plans if required in this example
revenue and production for the past year
is split by product and region with a
rich customizable interface we can
easily add visuals to track KPIs and
spot trends we notice a downward trend
since March let's see if this will
continue the forecast is based on
transactions from the past three years
we can see the forecast and summary view
or drill down into individual products
and markets since we've already created
our baseline demand forecast our
marketing product and sales teams can
now make adjustments in this example
marketing is creating a campaign to
promote the 200 s product our marketing
manager increases the forecast by 100
units for January and for every
subsequent month by 20% our demand
planner can now make adjustments and in
this case he increases demand by 2,000
units for the year notice our marketing
manager and demand planner are updating
the same plan
IBM Planning analytics makes
collaboration across the organization
easier and adds transparency and
visibility throughout the planning
process
now that the demand forecast has been
updated will create a manufacturing plan
to deliver the number of units
for each product according to the
increased demand starting with the
capacity limits from last time we can
adjust the number of units to be
produced at a certain plant in a given
period to reflect a potential increase
in the number of shifts or we can
decrease the units to reflect scheduled
maintenance operations now that we know
the forecasted demand and capacity plan
we can align the production plan to keep
enough units on hand in our inventory
our projected inventory falls below zero
indicating that we will face product
shortages and subsequent loss sales our
capacity limits are too low and will
prevent us from producing enough
inventory to satisfy demand let's
increase the capacity limits for the
first two months of the year by putting
a new shift policy in place so that
production lines will operate for longer
hours than before with this adjustment
let's calculate a new production plan to
take advantage of the additional
capacity the new production plan ensures
that the projected inventory remains
positive throughout the planning horizon
the two tallest bars in the graph
indicate a significant increase in
production during the first two months
thanks to our higher capacity limits
with IBM planning analytics it's easy to
create water scenarios to represent
different sets of inputs for example we
were just informed of a new promotion
with a different product mix following
the same steps we can quickly create a
new scenario as a test case and compare
alternatives side-by-side to see the
effects on-demand production and
inventory in addition to testing
assumptions we can easily expand our
plans to include new manufacturing
processes or product lines finally it's
imperative to connect our operations
plan with our financial plan here we can
see the impact of production changes on
the income statement for each of the
scenarios we created we can easily see
how much revenue will come from the
increase sales and the changing costs so
we can improve profit growth for our
business to conclude with IBM planning
analytics we can improve supply chain
efficiency with advanced plan
and forecasting capabilities and align
our strategic financial goals with our
operational targets
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