Oracle

Oracle Demand
Demand Planning
Planning

Overview
Overview

Copyright Oracle Corporation, 2000. All rights reserved.

 Oracle
Oracle Demand
Demand Planning
Planning Modular
Modular
Courses
Courses

•• Overview
Overview of
of Oracle
Oracle Demand
Demand Planning
Planning (ODP)
(ODP)
•• Administering
Administering Oracle
Oracle Demand
Demand Planning
Planning
•• Generating
Generating Forecasts
Forecasts
•• Analyzing
Analyzing and
and Managing
Managing Forecasts
Forecasts

Copyright Oracle Corporation, 2000. All rights reserved.

 Objectives
Objectives

After
After completing
completing this
this module,
module, you
you should
should be
be able
able to:
to:
•• Explain
Explain features
features and
and benefits
benefits of
of Oracle
Oracle Demand
Demand
Planning
Planning
•• Describe
Describe demand
demand planning
planning roles
roles
•• Explain
Explain demand
demand planning
planning process
process steps
steps

Copyright Oracle Corporation, 2000. All rights reserved.

 What
What is
is Demand
Demand Planning?
Planning?

•• Planning
Planning for
for future
future demand
demand scenarios
scenarios
–– Estimate
Estimate future
future demand
demand based
based on
on market
market
conditions
conditions
–– Collaborative
Collaborative planning
planning process
process involving
involving
internal
internal and
and external
external participants
participants
•• A
A crucial
crucial function
function for
for improving
improving operational
operational plans
plans
–– Optimal
Optimal resource
resource allocation
allocation
–– Reduced
Reduced inventory
inventory levels
levels
–– Improved
Improved customer
customer satisfaction
satisfaction
–– Exception-based
Exception-based forecast
forecast tracking
tracking and
and
notifications
notifications
®

Copyright Oracle Corporation, 2000. All rights reserved.

 Why
Why is
is Demand
Demand Planning
Planning Difficult?
Difficult?

•• Short
Short product
product life
life cycles
cycles
•• Evolving
Evolving market
market conditions
conditions
•• Global
Global markets
markets
•• Multiple
Multiple sales
sales channels
channels
•• Multiple
Multiple sources
sources ofof information
information
•• Demand
Demand distortions
distortions

Copyright Oracle Corporation, 2000. All rights reserved.

 Demand
Demand Distortions
Distortions

•• State
State of
of the
the economy
economy
•• Promotions
Promotions
•• Competitors’
Competitors’ responses
responses to
to promotions
promotions
•• Product
Product introduction
introduction and
and cannibalization
cannibalization
•• Lot-size
Lot-size discounts
discounts
•• Fiscal
Fiscal budget
budget cycle
cycle
•• Allocations
Allocations
•• Panic
Panic and
and perceptions
perceptions
•• Hedging,
Hedging, commodity
commodity futures
futures

Copyright Oracle Corporation, 2000. All rights reserved.

 Why
Why is
is Demand
Demand Planning
Planning Important?
Important?
Demand
Demand Planning
Planning Benefits
Benefits
•• Improve
Improve forecast
forecast accuracy
accuracy
–– Manage
Manage demand
demand distortions
distortions
–– Plan
Plan collaboratively
collaboratively
•• Improve
Improve operational
operational plans
plans
–– Inventory
Inventory reduction
reduction
–– Higher
Higher fill
fill rates
rates
–– Higher
Higher revenue
revenue

Copyright Oracle Corporation, 2000. All rights reserved.

 Improving
Improving Operational
Operational Plans
Plans

1 Market 2 Forecasting

4 Operations 3 Planning
®

Copyright Oracle Corporation, 2000. All rights reserved.

 Impact
Impact of
of Forecast
Forecast Accuracy
Accuracy on
on Safety
Safety
Stock
Stock Requirements
Requirements

Safety stock (SS) buffer inventory is proportional

to the average magnitude of forecast errors.

SS
SS

Large deviations Small deviations

Copyright Oracle Corporation, 2000. All rights reserved.

Basing
Basing Demand
Demand Forecasts
Forecasts on
on Sales
Sales History
History

•• Statistical
Statistical extrapolation
extrapolation of
of history
history provides
provides an
an
objective
objective baseline
baseline
•• Issues:
Issues:
–– Sales
Sales history
history usually
usually underestimates
underestimates thethe
actual
actual level
level of
of demand.
demand.
–– The
The effect
effect of
of unique
unique future
future events
events are
are not
not
reflected
reflected in
in sales
sales history
history data.
data.
–– Products
Products with
with short
short life
life cycles
cycles do
do not
not provide
provide
enough
enough historical
historical sales
sales data
data to
to identify
identify trends
trends
and
and patterns.
patterns.
•• Solution:
Solution: Supplement
Supplement historical
historical sales
sales data
data with
with
information
information about
about future
future events,
events, promotions
promotions andand
customer
customer plans.
plans.
®

Copyright Oracle Corporation, 2000. All rights reserved.

 Key
Key Features
Features

•• Internet
Internet collaboration
collaboration
•• View
View and
and work
work with
with data
data that
that is
is relevant
relevant to
to
responsibilities
responsibilities
•• Integrate
Integrate demand
demand forecasts
forecasts into
into
Advanced
Advanced Supply
Supply Chain
Chain Planning
Planning
•• Unlimited
Unlimited forecast
forecast scenarios
scenarios
•• Multidimensional
Multidimensional analysis
analysis
•• Multiple
Multiple statistical
statistical methods
methods
•• Automatic
Automatic selection
selection of
of best-fit
best-fit model
model
•• Exception
Exception reporting
reporting and
and feedback
feedback

Copyright Oracle Corporation, 2000. All rights reserved.

 100%
100% Internet-Based
Internet-Based Solution
Solution

•• Web
Web browser
browser access
access
•• Low
Low cost
cost to
to deploy
deploy
•• Global
Global visibility
visibility

Copyright Oracle Corporation, 2000. All rights reserved.

 Collaborative
Collaborative Forecasting
Forecasting

People Promotions Events

Internet

Forecast Actual Sales Demand plans

®

Copyright Oracle Corporation, 2000. All rights reserved.

 Information
Information Visibility
Visibility

•• Deploy
Deploy information
information using
using the
the World-Wide
World-Wide Web
Web
•• Information
Information visibility
visibility across
across the
the supply
supply chain
chain
•• Internal
Internal and
and external
external collaboration
collaboration with
with secured
secured
access
access to
to detailed
detailed plans
plans
•• Workflow
Workflow gets
gets the
the right
right information
information to
to the
the right
right
place
place quickly
quickly

Copyright Oracle Corporation, 2000. All rights reserved.

 Continuous
Continuous Improvement
Improvement
•• Integrated
Integrated performance
performance management
management
•• Exception
Exception notifications
notifications
•• Oracle
Oracle Workflow
Workflow process
process automation
automation

Establish Forecast Measure

Accuracy Targets Results

Supply
Chain
Planning Adjust Alert Out of
Forecast Notifications Tolerance
®

Copyright Oracle Corporation, 2000. All rights reserved.

 Integrated
Integrated Modules
Modules

Supply Chain
Planning Engine

Business
Intelligence System
M
Muul
lttii--
O
Orrg
Transaction g..
Systems PPlla
annn
SSee niinngg
rrvve
err

Global Demand
Available-to-Promise Planning
®

Copyright Oracle Corporation, 2000. All rights reserved.

 Planning
Planning Server
Server Information
Information

•• Historical
Historical sales
sales
•• Marketing
Marketing plans
plans M
Muul
•• Sales
Sales plans
plans lttii--
O
Orrg
g..
PPlla
annn
SSee niinngg
rrvve
err

Copyright Oracle Corporation, 2000. All rights reserved.

 Information
Information Flow
Flow

ERP

Booking data Planned orders

Shipment data ASCP
Manufacturing forecast

Scenarios

Supply plan

CRM Demand
Planning
Sales forecast
Sales opportunities
Marketing events

Copyright Oracle Corporation, 2000. All rights reserved.

 Performance
Performance Feedback
Feedback

Monitor Compare actual

performance to forecast

Take corrective Report

actions exceptions
®

Copyright Oracle Corporation, 2000. All rights reserved.

 General
General Features
Features

•• Activity
Activity log
log
•• Annotated
Annotated forecast
forecast changes
changes
•• Multiple
Multiple allocation
allocation rules
rules
•• Create
Create new
new forecast
forecast
•• New
New product
product introductions
introductions
•• Event
Event and
and promotion
promotion management
management
•• Ad
Ad hoc
hoc and
and predefined
predefined reports
reports

Copyright Oracle Corporation, 2000. All rights reserved.

 Statistical
Statistical and
and Analytical
Analytical Features
Features

•• Multiple
Multiple forecasting
forecasting techniques
techniques
•• Selection
Selection of
of best-fit
best-fit model
model
•• Multidimensional
Multidimensional analysis
analysis
•• Performance
Performance tracking
tracking

Copyright Oracle Corporation, 2000. All rights reserved.

 Statistical
Statistical Forecasting
Forecasting Methods
Methods

•• Exponential
Exponential smoothing
smoothing
–– Single
Single
–– Double
Double
–– Holt-Winters
Holt-Winters
•• Regression
Regression
–– Linear
Linear
–– 55 types
types of
of non
non linear
linear

Copyright Oracle Corporation, 2000. All rights reserved.

 Selection
Selection of
of Best-Fit
Best-Fit Model
Model

•• Geneva
Geneva forecast
forecast engine
engine
•• Rapidly
Rapidly determines
determines which
which forecasting
forecasting models
models are
are
likely
likely to
to produce
produce the
the best
best statistical
statistical forecasts
forecasts
•• Best-fit
Best-fit selection
selection from
from nine
nine models
models
•• Outlier
Outlier detection
detection and
and filtering
filtering
•• Seasonality
Seasonality and
and erratic
erratic demand
demand filtering
filtering

Copyright Oracle Corporation, 2000. All rights reserved.

 Scenarios,
Scenarios, Reconciliation,
Reconciliation, and
and
Consolidation
Consolidation Features
Features
•• Multiple
Multiple forecasting
forecasting scenarios
scenarios
•• Top-down,
Top-down, middle-out,
middle-out, and
and bottom-up
bottom-up
allocation
allocation strategies
strategies
•• Forecast
Forecast adjustments
adjustments
•• Multiple
Multiple units
units of
of measure
measure
•• Convert
Convert units
units to
to currency
currency and
and
vice
vice versa
versa
•• Consolidation
Consolidation of
of individual
individual forecasts
forecasts

Copyright Oracle Corporation, 2000. All rights reserved.

 Scenarios
Scenarios

Marketing Sales
events forecasts

Manufacturing Customer
forecasts forecasts

Unconstrained Statistical
forecasts forecasts

Copyright Oracle Corporation, 2000. All rights reserved.

 Demand
Demand Analysis
Analysis

•• Unconstrained
Unconstrained demand
demand forecasts
forecasts
•• Constrained
Constrained supply
supply plans
plans
•• Resource
Resource cost
cost versus
versus lost
lost sales
sales

Copyright Oracle Corporation, 2000. All rights reserved.

 Multidimensional
Multidimensional Model
Model
Sales
Sales Product
Oracle8i

Tutor

Designer

Discoverer

General
Americas
Ledger
Europe
August
Asia July
June
May

Time
Geography
®

Copyright Oracle Corporation, 2000. All rights reserved.

Three
Three Typical
Typical Dimensions
Dimensions

Product

Geographic Time
Region

Copyright Oracle Corporation, 2000. All rights reserved.

 Multidimensional
Multidimensional Flexibility
Flexibility

Compare regional demand Compare demand for

by time and product different products by
time and location

Analyze how sales for a Perform Ad Hoc

product and location queries
change over time
®

Copyright Oracle Corporation, 2000. All rights reserved.

Time
Time Dimension
Dimension
Hierarchies
Hierarchies
Manufacturing Gregorian Fiscal
Calendar Calendar Calendar
hierarchy hierarchy hierarchy
All

Manufacturing Year Fiscal year

period
Quarter Fiscal quarter
Manufacturing
week Month Fiscal month

Day
®

Copyright Oracle Corporation, 2000. All rights reserved.

Product
Product Dimension
Dimension Hierarchies
Hierarchies

Product Product
Family Category
hierarchy hierarchy
All

Product family Product category

Product

Copyright Oracle Corporation, 2000. All rights reserved.

Geography
Geography Dimension
Dimension Hierarchies
Hierarchies

Customer Customer
Geography Group Class
hierarchy hierarchy hierarchy
All

Area
Customer Customer
group class
Country

Region Customer

Ship-to location
®

Copyright Oracle Corporation, 2000. All rights reserved.

 Demand
Demand Planning
Planning Roles
Roles

•• Demand
Demand Planning
Planning System
System Administrator
Administrator
–– Demand
Demand Planning
Planning Integration
Integration Administrator
Administrator
–– Demand
Demand Planning
Planning Administrator
Administrator

Demand Planning Demand Planning

Integration Administrator: Administrator:

Demand planning Express

server, RDBMS
®

Copyright Oracle Corporation, 2000. All rights reserved.

 Demand
Demand Planning
Planning Roles
Roles

•• Demand
Demand Planner
Planner
–– Analyzing
Analyzing and
and forecasting
forecasting demand
demand
–– Submitting
Submitting scenarios
scenarios
•• Demand
Demand Planning
Planning Manager
Manager
–– Review
Review and
and adjust
adjust forecasts
forecasts
–– Submit
Submit final
final scenarios
scenarios

Copyright Oracle Corporation, 2000. All rights reserved.

 Demand
Demand Planning
Planning Setup
Setup Steps
Steps

System
System Administrator:
Administrator:
1.
1. Set
Set up
up instances.
instances.
2.
2. Create
Create database
database links.
links.
Demand
Demand Planning
Planning Integration
Integration Administrator:
Administrator:
3.
3. Create
Create dimension
dimension definitions.
definitions.
4.
4. Create
Create demand
demand plan
plan definitions.
definitions.
5.
5. Define
Define scenarios.
scenarios.
6.
6. Run
Run collection
collection programs
programs to
to load
load interface
interface tables.
tables.

Copyright Oracle Corporation, 2000. All rights reserved.

 Demand
Demand Planning
Planning Process
Process Steps
Steps

Demand
Demand Planning
Planning Administrator:
Administrator:
7.
7. Load
Load data
data into
into Oracle
Oracle Express
Express database.
database.
8.
8. Generate
Generate baseline
baseline forecasts.
forecasts.
9.
9. Assign
Assign data
data to
to users,
users, generate
generate reports,
reports, and
and notify
notify
users.
users.

Copyright Oracle Corporation, 2000. All rights reserved.

 Demand
Demand Planning
Planning Process
Process Steps
Steps

Demand
Demand Planners:
Planners:
10.
10. Analyze
Analyze and
and adjust
adjust forecasts.
forecasts.
11.
11. Submit
Submit saved
saved forecast
forecast scenarios
scenarios to
to the
the shared
shared
server.
server.

Copyright Oracle Corporation, 2000. All rights reserved.

 Demand
Demand Planning
Planning Process
Process Steps
Steps

Demand
Demand Planning
Planning Administrator:
Administrator:
12.
12. Consolidate
Consolidate forecasts.
forecasts.
Demand
Demand Planning
Planning Manager:
Manager:
13.
13. Perform
Perform managerial
managerial review
review of
of forecasts.
forecasts.
Demand
Demand Planning
Planning Administrator:
Administrator:
14.
14. Submit
Submit final
final forecasts
forecasts to
to the
the planning
planning server.
server.

Copyright Oracle Corporation, 2000. All rights reserved.

 Demand
Demand Planning
Planning Process
Process Steps
Steps

Demand
Demand Planning
Planning Administrator:
Administrator:
15.
15. Clean
Clean up
up the
the database
database and
and prepare
prepare for
for the
the next
next
round
round of
of planning.
planning.

27
$10
$91 X 49
12676
Database Q85
12 14

Copyright Oracle Corporation, 2000. All rights reserved.

 Summary
Summary

In
In this
this lesson,
lesson, you
you should
should have
have learned
learned how
how to:
to:
•• Explain
Explain features
features and
and benefits
benefits of
of Oracle
Oracle Demand
Demand
Planning
Planning (ODP)
(ODP)
•• Describe
Describe demand
demand planning
planning roles
roles and
and processes
processes

Copyright Oracle Corporation, 2000. All rights reserved.

 Review
Review Question
Question

Regarding
Regarding statistical
statistical demand
demand forecasts
forecasts based
based on
on
sales
sales history
history data
data — —
1.
1. A
A strength
strength is
is their
their ability
ability to
to account
account for
for the
the effects
effects
of
of future
future events,
events, promotions
promotions and and customer
customer plans.
plans.
2.
2. They
They are
are useful
useful for
for providing
providing an an objective
objective baseline.
baseline.
3.
3. They
They become
become more more useful
useful when
when products
products have
have
shorter
shorter life
life cycles.
cycles.
4.
4. They
They tend
tend to to overestimate
overestimate the
the actual
actual level
level of
of
demand.
demand.

Copyright Oracle Corporation, 2000. All rights reserved. 41

 Review
Review Question
Question

Regarding
Regarding statistical
statistical demand
demand forecasts
forecasts based
based on
on
sales
sales history
history data
data — —
1.
1. A
A strength
strength is
is their
their ability
ability to
to account
account for
for the
the effects
effects
of
of future
future events,
events, promotions
promotions and and customer
customer plans.
plans.
2.
2. They
They are
are useful
useful for
for providing
providing an an objective
objective baseline.
baseline.
3.
3. They
They become
become more more useful
useful when
when products
products have
have
shorter
shorter life
life cycles.
cycles.
4.
4. They
They tend
tend to to overestimate
overestimate the
the actual
actual level
level of
of
demand.
demand.

Copyright Oracle Corporation, 2000. All rights reserved. 42

 Review
Review Question
Question

A
A large
large customer
customer uses
uses thethe internet
internet to
to communicate
communicate aa
forecast
forecast of
of their
their demand
demand for for your
your products
products to
to your
your
demand
demand planning
planning system.
system. This
This collaborative
collaborative
customer
customer isis acting
acting in
in the
the role
role of:
of:
1.
1. Demand
Demand plan
plan manager
manager
2.
2. Demand
Demand planner
planner
3.
3. Demand
Demand planning
planning administrator
administrator
4.
4. Demand
Demand planning
planning integration
integration administrator
administrator
5.
5. System
System administrator
administrator

Copyright Oracle Corporation, 2000. All rights reserved. 43

 Review
Review Question
Question Solution
Solution

A
A large
large customer
customer uses
uses thethe internet
internet to
to communicate
communicate aa
forecast
forecast of
of their
their demand
demand for for your
your products
products to
to your
your
demand
demand planning
planning system.
system. This
This collaborative
collaborative
customer
customer isis acting
acting in
in the
the role
role of:
of:
1.
1. Demand
Demand plan
plan manager
manager
2.
2. Demand
Demand planner
planner
3.
3. Demand
Demand planning
planning administrator
administrator
4.
4. Demand
Demand planning
planning integration
integration administrator
administrator
5.
5. System
System administrator
administrator

Copyright Oracle Corporation, 2000. All rights reserved. 44

 Review
Review Question
Question

The
The demand
demand plan
plan manager
manager is
is responsible
responsible for:
for:
1.
1. Setting
Setting up
up instances
instances
2.
2. Defining
Defining scenarios
scenarios
3.
3. Generating
Generating baseline
baseline forecasts
forecasts
4.
4. Assigning
Assigning data
data slice
slice to
to demand
demand planners
planners
5.
5. Reviewing
Reviewing and
and approving
approving final
final forecasts
forecasts

Copyright Oracle Corporation, 2000. All rights reserved. 45

 Review
Review Question
Question Solution
Solution

The
The demand
demand plan
plan manager
manager is
is responsible
responsible for:
for:
1.
1. Setting
Setting up
up instances
instances
2.
2. Defining
Defining scenarios
scenarios
3.
3. Generating
Generating baseline
baseline forecasts
forecasts
4.
4. Assigning
Assigning data
data slice
slice to
to demand
demand planners
planners
5.
5. Reviewing
Reviewing and
and approving
approving final
final forecasts
forecasts

Copyright Oracle Corporation, 2000. All rights reserved. 46