With progress stalled or heading the wrong way on key CP efficiency

and effectiveness indicators, CP companies must expand supply

planning activities across the supply network, rather than relying on

a top-down, centrally managed approach.

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The sales team wants to know: “How do we improve our visibility into demand, so that we can sell more?” KPIs: Revenue objectives, customer satisfaction, forecast accuracy.

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The supply chain director wants to know: “How can I accelerate response so I can keep service levels high and inventory low?” KPIs: Customer service levels, inventory levels, supply chain costs.

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The operations director wants to know: “How do I balance demand and supply so the business can grow profitably?” KPIs: Total revenue, total throughput, total profitability.

Each stakeholder has a primary interest that, when not aligned with the others, can work at cross purposes, undermining the efficiency and profitability objectives of the organization as a whole.

For example, sales is interested in selling as much as possible, doing whatever it takes to make that one extra sale and hoping supply chain will be able to deliver -- somehow. Supply chain, for its part, is concerned with service levels, with inventory levels and, above all, with minimizing overall supply chain costs.

And operations, via its S&OP planning process, seeks to tie these demand and supply activities together on a high level, hoping that by establishing the right capacities and making the right demand fulfillment decisions on a mid- to long-term horizon, the company will be able to achieve its overall revenue throughput and profitability goals.

COLLABORATIVE CAPABILITIES BRING STAKEHOLDERS TOGETHER, CREATE ALIGNMENT

The end-to-end collaborative demand and supply planning process should serve to bring all these stakeholders together, and align them so that they are able to work efficiently and effectively toward the common goal. To this end, all relevant data streams –– point of sale from retailers, orders from customers, promotion plans from marketing, or forecasts from the sales team –– must be harmonized and consolidated so that everyone has a clear picture of demand.

The diagram on page 10, “Collaborative Demand and Supply Planning: An End-to-End Cross-Functional Process,” illustrates how and where key internal stakeholders and functions need to be aligned across the supply network in order to better synchronize supply with demand.

Collaborative demand and supply solutions from SAP enable these stakeholders to build collaborative demand and supply planning processes that continuously sense demand fluctuations, supplier delivery volatility, and operational disruptions.

Supported business processes include:

COLLABORATIVE DEMAND MANAGEMENT

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The use of down-stream demand signals significantly improves forecast accuracy and on-shelf-availability because you can respond instantaneously to demand changes at the POS. SAP’s Demand Information Management solution provides CP companies with cleansed and harmonized demand signals from retailers or data providers.