Demand forecasting Forecast is said by Stevenson to be a basic input in the decision processes of operations management because they provide

information on future demand. The important of forecasting to operations management cannot be overstate. The primary goal of operations management is to match supply with demand. Having a forecast is important for determining how much capacity or supply will be needed to meet demand. There are two important aspects of forecasts. The first one is the expected level of demand which can a function of some structural variation such as a trend or seasonal variation. The second aspect is the measurement part which deals with the function of the ability of forecasters to correctly model demand, random variation and sometimes unforeseen events (Stevenson, 2009). Forecasts are made with a reference to a specific time horizon. The time scale may range from hourly to the next five years depending on the industry. Within the time frame, forecasts are basis for budgeting, planning capacity, sales, production and inventory, purchasing and more. Demand forecasting is essentially a linear process of translating input assumptions into a forecast of expected sales; demand management, by contrast, is a highly iterative process that involves driving to a revenue and profit target through prioritization of customers, channels, products, geographies and the demand stimulation programs available to the enterprise. (Aberdeen Group ND). When considering the traditional distribution system relationships between the manufacturers of a consumer packaged goods and the retailers who sell the product to the public. Each retailer must forecast demand for each SKU at the store level. Based on these forecasts and on a consideration of available inventory, warehouse stocks, lead times, promotion plans, and other factors, each retailer than develops an "order plan" which contains the timing and size of the stock replenishment orders that the retailer intends to place on the manufacturer. While this is going on, the manufacturer is also forecasting its demand for each item by time period. In effect, the manufacturer is trying to forecast, time period by time period, the effective sum of the order plans from all of the retailers. In traditional practice, the manufacturer forecasts this total demand independently, with no input from the retailers. In collaborative forecasting, the retailers would share their demand forecasts and their current order plans with the manufacturer, and the manufacturer would aggregate these data to construct and verify its forecasts. Discrepancies

between the retail order plans and the manufacturer forecasts would be identified and resolved. The final result would be improved forecast accuracy, less total inventory in the system, and a smoother deployment of the goods into the retail channel. The central premise of collaborative forecasting has great merit, but there are a number of potential problems that must be solved to gain the promised benefits. First, there is an issue with the level of aggregation of the forecasts being shared. Second, there is a communications issue involving the transfer of these data between firms. Finally, there is an issue with the sheer volume of data that would be processed in such a system (Armstrong, Green, 2005).

There are several factors affecting demand forecasting in the 21st century, so to explore more the researcher looked at the IBM Company and how forecast affects their operations at different level of the processes. This is shown in the figure below.

Below is the brief description of forecasting methods. Forecasting methods and the relationships between them are shown in the figure below, starting with the primary distinction between methods that rely on judgment and those that require quantitative data. The Methodology Tree for Forecasting below classifies all possible types of forecasting methods into different categories and shows how they relate to one another. Dotted lines represent possible relationships.

Methodology Tree for Forecasting

As can be seen from the above information that has been collected, forecasting is a wide range area that demands a huge number of skilled workers, money, and can also rake a lot of time. Due to this, keeping inventory levels low, costs down and customers happy in a Web-based, now largely global marketplace requires companies to proactively forecast and manage supply and demand dynamically supported by best-of-breed techniques, technologies and practices. Today, this calls for a delicate balance of art, science and technology.

Forecasting product demand is crucial to any supplier, manufacturer, or retailer. Forecasts of future demand will determine the quantities that should be purchased, produced, and shipped. Demand forecasts are necessary since the basic operations process, moving from the suppliers' raw materials to finished goods in the customers' hands, takes time. Most firms cannot simply wait for demand to emerge and then react to it. Instead, they must anticipate and plan for future demand so that they can react immediately to customer orders as they occur. In other words, most manufacturers "make to stock" rather than "make to order" they plan ahead and then deploy inventories of finished goods into field locations. Thus, once a customer order materializes, it can be fulfilled immediately since most customers are not willing to wait the time it would take to actually process their order throughout the supply chain and make the product based on their order. An order cycle could take weeks or months to go back through part suppliers and sub-assemblers, through manufacture of the product, and through to the eventual shipment of the order to the customer (Armstrong, Green, 2005).

Firms that offer rapid delivery to their customers will tend to force all competitors in the market to keep finished goods inventories in order to provide fast order cycle times. As a result, virtually every organization involved needs to manufacture or at least order parts based on a forecast of future demand. The ability to accurately forecast demand also affords the firm opportunities to control costs through leveling its production quantities, rationalizing its transportation, and generally planning for efficient logistics operations. In general practice, accurate demand forecasts lead to efficient operations and high levels of customer service, while inaccurate forecasts will inevitably lead to inefficient, high cost

operations and/or poor levels of customer service. In many supply chains, the most important action we can take to improve the efficiency and effectiveness of the logistics process is to improve the quality of the demand forecasts.

Demand Planning Demand, is products and services when and where customer needs (Susan L, 2009). Demand planning is important to basic planning activities in demand and supply network and to establish the effectiveness of manufacturing and logistics planning, likes capacity and safety stock planning. There is another definition for demand planning. Demand planning defines as improving cash flow and profitability, may become lifeline in recession (Susan L, 2009). Demand planning is the businesss starting point for the planning and use of company resources in the pursuit of profitability (Susan L, 2009). Somehow to develop the quality of supply chain planning, demand planning is fetching the best challenges faced by manufacturers.

The factors affecting demand uncertainty and unpredictable demand information are accelerating economic cycle intense competition, fickle end user preferences and fast development of product in supply chain. To control the demand variability, Argon Chen, 2006 said demand aggregation is far more effective than statistical forecasting in operations planning for any two demands with low positive correlation or negative correlation. Besides, Huang, Chang and Chou, 2006 said real option approach (based-forecasting) can effectively deal with the long-term trends and random variation involved in a given demand stochastic diffusion process for forecasting demand during the approaching planning horizon for products with high random volatility on demand.

According to Susan L, 2009 stated that in term of strategic management, there are four parts is discussing on demand planning best practices in relation to ongoing, even successful, in the recessionary period and preparing to come out the other part in best possible financial health. First of all, make the case for improving demand planning processes with delay. Second, explaining the best practices in demand planning that are of particular importance in recession. Third, to implement and operate the processes at peak performance, therefore will discuss the people implications and change management requirement. At last, improving the layout path with include implications for other business process, in order to be thriving.

Beyond simply meeting influential partners demands, many enterprises are uncertain about quantifying total cost of ownership and identifying business objectives. Developing an effective supply-chain integration strategy for the long term requires that companies address these two areas before they can realistically justify or refute technology options. (Yankee Group, 2004). According to Yankee Group, 2004 stated that Demand planning has enabled companies to more perfectly forecast what their industry, market and customers will involve. Besides, demand planning has accept to link and integrate processes transversely networks and facilitate nearer teamwork among before isolated parties, respond enthusiastically to market and consumer trends and deliver a better, more satisfying skill across the value chain. In recent times, there are many firms are focusing on managing demand, rather than simply reacting to it.

Benefits relates to business performance associated with sales and operation planning if it is being managed in an appropriate way. Advanced planning and scheduling includes demand, supply or specific S&OP modules with the functionality needed in supporting the S&OP process.

This system helps in frequent rescheduling support modifications of S&OP decisions. Besides that, there are also greater potential of frequent rescheduling support modifications of S&OP decisions. At the same time the functions such as of what if simulation, finite scheduling and real time integrated S&OP work bench being included in the APS systems. Even this system being practiced in delivery times, inventory levels and utilization rates for higher level of customer service and major reduction in costs. Hence, there also benefits of using the well working planning process or without advanced working planning systems support and increases the understanding of APS support the planning process and which benefits APS give to the process. This system has been used in the design of advanced algorithms in solving planning and scheduling problems. Studies have shown that APS are used as descriptive nature and the benefits obtained will be used of indirect interest. Even some studies shows that APS support planning in general and but dont look at specific planning purpose. As it is well known there are a lot of benefits but is divided into three which are decision support system, planning efficiency and learning effect. The most common benefit will be the decision support benefits visualization of information has been underestimated by previous research and APS experts. The case study analysis showed the benefits perceived in the different S&OP activities differed. Basically, these potential benefits being explained in case unique usage, the cause and effect relationship between the potential benefits and its antecedents. (Ivert.K. L and Jonsson.P, 2010)

Demand works Demand works was founded in 1993 as Advanced Planning System. It provides demand and supply planning solutions in delivering wider scale improvements in forecast accuracy, coordination and asset deployment. Demand works diverted the focuses on business forecasting, forecast collaboration, demand planning, and safety stock optimization, inventory management and sales & operation planning. Business forecasting in engine were designed for the noisy tactical data that prevails and channel based sales and operation planning. It moves well with the difficult to forecast time series (Source: www.demandworks.com). Demand planning which is set up for an extreme accurate expected statistical forecast and adds value to important aspect such as demand consensus, performance and exception management to provide a comprehensive demand management solution. At the same it gives importance to supply planning which balances demand scenario with inventories, lead times and capacities to generate actionable sales and operation plans. Under the aspect of forecasting collaboration it has three primary approaches for collaborative forecasting with Smoothie and two primary user interfaces which includes Microsoft Excel and Smoothie Collaborators (Source: www.demandworks.com). The breakdowns would be desktop collaboration using Excel and Email, automated collaboration with Excel and Email or Network File Sharing and the automated collaboration with Smoothie Collaborators. Another solution would be the safety stock optimization which considers the lead times, forecast error and desired levels to calculate optimal inventories. Next the inventory management which gives full view to inventories demand and supply throughout the organization s supply chain. It influences the forecasts, orders, inventories, in- transits and reorder policies to produce time-phased inventory plans. It supports multi level DRP, MRP, and kits where demand for one item produces demand for others in various multiples. The least solution is the sales and operations planning where successful companies

use to anticipate and synchronize supply and demand, and to achieve focus and strategic alignment among the selling, producing, purchasing, logistics, executive and financial functions within a business (Source: www.demandworks.com).

The solutions record: 1. Business Forecasting Software

Statistics are forwarded, but don t have to be a statistician to use Smoothie. Automatic forecasts will be the best and firm has the option to guide the engine by giving opinion in using trended or seasonal models, making top-down changes, or even forecasting with simulated histories without losing visibility to actual demand. Existence of powerful multi level synchronization has improved accuracy and exclusion filtering which highlights items otherwise further attention that customer required. Besides that, this software is developed for noisy tactical data which exist in product and channel-based sales and operations planning. In the situation of difficult- to-forecast time-series which exist in industry this software works well. Smmothie s precision aligned with other commercial statistical engines where it scores tremendous accuracy in such comparisons which had made many customers to benchmark the accuracy. Besides forecasting, Smoothie help businesses optimize inventory levels and prepare for the unexpected by using the error estimates, lead times and required service levels. (Source: www.demandworks.com)

2. Demand Planning

This image shows spread sheet and graphical view of Smoothie with statistical consensus sales plan and budgeted presented simultaneously for easy comparison. Smoothie can function with other system such as financial planning and budgeting, trade funds, CRM, Excel and other forecasting system. Smoothie too can get along with reference plan which can be automatically aggregated or disaggregated with Smoothie s statistical or collaborative plans. The image below shows a spreadsheet and graphical view of

Smoothie with statistical, consensus, Sales plan and budget presented together for easy comparison. Note that the comparisons incorporate historic performance as well as future expectations
(Source: www.demandworks.com).

2. Forecasting Collaboration -Desktop Collaboration Using Excel and Email

Automated Collaboration with Excel and Email or Network File Sharing

Automated Collaboration with Smoothie Collaborators

Safety Stock Optimization

Inventory Management

3.

S&OP

As it is known excel and email hits the higher usage in corporations which
dont require special IT or infrastructure support. Collaborator training is not required since the mutual user interface is excel. The contributor contributes as usual by receiving spreadsheets by changing the figures and sending them back to the demand manager. (But with Smoothie the process will be much easier and more precise).

Automated Collaboration with Excel and Email or Network File Sharing With Smoothie Mambo, pre-formatted forecast alliance spreadsheets can be planned for automatic distribution to users via email, shared directories, or using a Microsoft SharePoint shared workspace. It is similar to the desktop approach excluding the security-controlled spreadsheets are automatically distributed and accounted back into the plan in an automated, scheduled set of processes. Desktop approach need some IT support for configuring the server and automation, however it offers the benefits of easy operation and management, a basic interface for mutual users, and automatic combination of collaborative input into the agreed plan. Authorization is required for Smoothie Mambo server software and traitor licenses for the joint users. Automated Collaboration with Smoothie Collaborators The elective Smoothie Collaborator client gives end users with a wider functionality for glancing and adjusting forecasts. Smoothie Collaborator clients permit dealings with plans at flexible levels of aggregation, using substitute units of measure, prices or costs, etc. They also provide advanced graphic and spreadsheet-based views, the capability to communicate and 'what-if' directly with the statistical forecasting functions, possible visibility to reference forecasts and other related demand information, plus easy viewing and exchange of notes with other users. Collaborators can even export graphs or spreadsheets.

The Smoothie Mambo server software restricts the details that users can view and/or modify, and forecast alterations and notes are seamless ly synchronized with the host plan when users connect to the server. In accordance with spreadsheets, Smoothie Collaborator can be used even there is no internet connection while traveling or meeting with customers.

Safety Stock Optimization

Smoothie SP gives importance to lead times, forecast error and desired service levels to calculate optimal inventories. Calculated safety stocks can be two forms which are time-based or quantity-based. Minimum inventory levels is being administered with the occurrence of fixed policies like minimum quantities or days of cover, and statistical together with fixed policies .For example, the safety stock policy can be the greatest of 100 units or a 98 percent service level. Each item or item-location in Smoothie can have different replenishment and safety stock policies. Fixed policies like minimum order quantities or lead times can be imported from the ERP system, or they can be administered within Smoothie. There are changes in policies and simulated for groups or classifications of items. While inspiring group or item-specific changes, the user can immediately evaluate the force on projected inventories in units or inventory cost, enabling rapid and informed inventory optimizations. Stimulate

Inventory Management
Smoothie provides entire visibility to inventories, demand and supply throughout your supply chain. It influences forecasts, orders, inventories, in-transits and reorder policies to produce timephased inventory plans. Inventory management in Smoothie SP being handy for multi-level DRP, MRP, and kits where demand has positive relationship. This means demand of one product has affects the demand for others in different multiples. New plans can be integrated with your ERP system to produce demand, or Smoothie will export the requirements into handy spreadsheet or database formats.

Sales and Operations Planning

Strategic business process that successful companies use to foresee and match supply and demand, and to accomplish focus and tactical position among the business transactions, logistics, executive and economic functions within a business can be referred as sales and operations planning. An effective S&OP process helps in the analysis and direction of business approach, and it guarantees that the key functions within the business run synchronously (Source:
www.demandworks.com).

People, Process, and Smoothie As sales and operation planning is just business process, it is permitted by tools like Smoothie. Vitality of S& OP process is sales, production and procurement planning. Smoothie lends accuracy and visibility to supply as well as sales plans. On the demand side, it produces accurate numerical forecasts and provides an effective construction for forecast collaboration. In the supply point of view it helps in the founding of valuable supply policies and synchronizes tactical supply executing with demand and inventory management strategy (Source:
www.demandworks.com).

Sales and operations planning are all about bringing together: this means matching demand with supply, tactics with strategy, and aligning functions within your business. Smoothie merge demand and supply with single outcome, highly visible framework. The Pivot Forecasting in Smoothie enables matching by making it feasible for different functions in the business to imagine and implement according to their distinctive perspectives. Some parts of the company are more focused on channels; such as products, production facilities, distribution and suppliers. Furthermore, Sales and Finance might work with revenue, while production and logistics work with units. Different parts of the company have the ability to deal with different units. The plant may produce in batches of gallons, tons or hectolitres, while logistics plans and distributes cases, pallets, truck or rail car load (Source: www.demandworks.com).

Smoothie has powerful functionality for supportive perception. It allows automatic and synchronous alteration of substitute measures, slot in supply as well as demand, and it operates on various and constant levels of product and channel aggregation. S&OP can be implemented without tools like Smoothie, but it's very much harder to do and the business enjoys the benefits which is achieved significantly thus, increase with the effective use of technology.

Smoothie Pricing
Smoothie by Demand Works is available in different versions to satisfy a range of organizational and business needs. See the Products and Solutions sections for more information about the various editions of Smoothie, or contact Demand Works for specific configuration advice.

Standalone Pricing
Base Price* $500 Price With Required 1-Yr Maintenance* N/A** $3,000 $4,800 $6,000

Smoothie Learning Edition

$2,500

Smoothie
$4,000

Smoothie Plus
$5,000

Smoothie SP

Server-Based Configurations
Base Price*

Smoothie Mambo (per server)*** (Requires either Smoothie, Smoothie Plus, or Smoothie SP) Smoothie Collaborator Support untethered demand collaboration. Collaborators can review and adjust demand plans. Collaborators can not create new models or perform any other model administration. (Requires Smoothie Mambo) Spreadsheet Collaborator Automated distribution of collaboration spreadsheets and consolidation of spreadsheet forecasts and comments with

$5,000 $1,700 each or 10 for $12,750 or 20 for $22,500 $1,000 each or 10 for $9,000 or

Smoothie Mambo. (Requires Smoothie Mambo) Read-Only Can access demand as well as supply plans, but can not make changes. (Requires Smoothie Mambo)

20 for $16,000

$800 or 10 for $6,000

Kinaxis RapidResponse
Kinaxis RapidResponse combines collaborative and integrated demand-supply planning, monitoring and response to change to empower front-line supply chain staff with tools for demand management, supply chain visibility, supply management, sales and operations planning (S&OP) and supply chain risk management(http://www.kinaxis.com/supply-chain-solutionscompany/index.cfm assessed on 22 November 2010). Besides, it is providing on-demand supply chain management solutions to help a big range of industries and customers where are aerospace & defense, automotive, consumer products, high technological, consumer electronics and medicals devices markets. Kinaxis RapidResponse is helping to close that gap and balance demand and supply that can deliver to customers need. The supply chain company wants to increase customer service meanwhile reducing inventory risk, therefore RapidResponse is an ondemand supply chain management service that provide speedy and collaborative supply chain planning, continuous monitoring of performance to the plan and instant response to demand and supply misalignments. With this software, that can respond to plan variations rapidly and successfully to accomplish greatest financial performance and higher customer fulfillment.

(Source: http://www.husdal.com/about/kinaxis-rapid-response/ assessed on 28 November 2010) There are few successful worlds leading manufacturing companies are using Kinaxis RapidResponse to establish superior responsiveness within their fulfillment networks and supply chains and gain competitive advantage as well as to improve supply chain efficiency and customer service levels such as Casio, Research in Motion (RIM), Toshiba, Raytheon and Jabil. There are two products provide by Kinaxis RapidResponse RapidResponse Sales and Operation Planning (S&OP) edition and RapidResponse Supply Chain Management (SCM) edition.

RapidResponse Supply Chain Management (SCM) Edition The worlds market leading manufacturing companies use RapidRespones SCM edition to improve supply chain efficiency and customer service levels. The reason why customers chose RapidResponse to over solution by ERP vendors is tuned supply chain analytics, extensive collaboration tools and multi enterprise supply chain visibility and invincibility computational speed. RapidResponse SCM edition make it possible for create a supply chain plan and actively monitor performance to that plan and coordinate a response when the plan is at risk immediately. Besides, it is enables to instantly understand the impact on operations of a change in demand supply or product and the co-operation across the organization can collaborate on multiple action alternatives to make quick and informed decision.

Dealing the biggest supply chain management and S&OP challenges with a single service that provides: y y Visibility into critical date Get a single view of the truth Alerts and Event management Focus on urgent issues, before they turn into major problems y y y Rapid Calculations see outcomes in seconds What-if analysis collaborate to determine the best supply chain decision possible Score carding Rank and align decisions with goals in real time.

RapidResponse Operational Scorecard

(Source: http://www.kinaxis.com/downloads/pdf/RapidResponse-Brochure.pdf )

RapidResponse Sales and Operation Planning (S&OP) edition Sales and operations planning is an integrated business management process through the leadership team to achieve focus, alignment and synchronization among all function of the company and also supports effective supply chain management. RapidResponse Sales and Operation Planning (S&OP) edition is strong enterprise application that drives mature S&OP processes. Simultaneously, it is balancing demand and supply, weigh financial and operational objectives and perform both volume and mix planning from a system. Besides, this system also assist maximize business opportunities and minimize supply chain risk by ensuring the plan are feasible and always in update. RapidResponse: To support the stages found in S&OP: S&OP cycle kick off, demand planning, supply planning, financial review, executive meeting and publishing the S&OP plan, RapidResponse S&OP edition are providing resources and functionality. Despite the RapidResponese offer a roadmap to organization that can follow the process and usage of the solution is flexible and adaptable. There are not limited to a sequential process with RapidResponse. Therefore, also enables continuous, event driven S&OP the state of current plan is actively implement and appropriate people are notified when the plan is at risk, thus can take action to course correct immediately. y Dashboards and workbooks are the worksheets that provide a role based view of key metrics for evaluating the Sales and Operating Planning at vary stages of the process and it is evaluating the data in the S&OP dashboards against financial and operation goals. The S&OP edition workbooks are allowing modifying and reviewing the data in S&OP process. Below are the controlling sales and operation planning in

Scenarios deep scenario simulation capabilities are include for managing the S&OP process. Scenarios are enable organization to create few versions of S&OP plan quickly. Scenarios are evaluated against key metrics, and each party can review their results and commit their best scenario.

Multiple Hierarchies can view data at a high or lower, aggregate level in the workbooks and dashboards for S&OP, as well as can view the intersection of two or more hierarchies.

RapidResponse compare edition features

(Source: http://www.kinaxis.com/supply-chain-management-products/rapidresponse-features.cfm )