NOTES FROM
THE FIELD
VOLUME 2
PREDICT
ING22
DEM
AND
PIECES
OF PEER
ADVICE
Improving the
ability to predict
future demands in a
volatile marketplace
PRACTICAL ADVICE
from food experts on solving critical issues.
WHAT IS “NOTES FROM THE FIELD”?
To help food manufacturers with some of the
key industry issues Columbus has asked the Food
Community “What advice would you give your
peers to improve the ability to predict future
demands in a volatile marketplace?” Experts
from our food manufacturing customers, our
employees, analysts, consultants and partners
from all over the globe have fed back either
directly to Columbus or via our social media
channels to give their “Notes from the Field.”
We received hundreds of responses which were
distilled into this document which we hope you
will find useful and interesting.
PREDICTING DEMAND
Predicting the future is always fraught
products to be available when they want
with issues and a volatile market place
them and therefore there is a constant
exacerbates the difficulty. It is critical for
inventory balancing act. With a myriad of
food businesses to be able to deliver the
factors determining demand, organizations
right product, in the right quantity at the
need to use all the resources available. In
right time. And with expiration dates
an extremely competitive market place
on many food products the complexity
the difference between getting this right
becomes even greater. Customers expect
and wrong can have a huge effect of the
business.
NOTES FROM
THE FIELD
Q:
What advice would you give
your peers to improve the ability
to predict future demands in a
volatile marketplace?
“ Demand management and a more mature sales and
operations planning process can only be attained
with having current generation advanced planning
software which leverages the advances which
have been made in using applied mathematics to
the problem of synchronizing demand and supply.
The fast eat the slow. To be fast, you must have
visibility and flexibility which can only come from
quick decision-making based on good information and
supply chain modeling. ”
PHILIP BRUNS, United States
Know the economics of your
business. Understand what
will happen to its economics
if you lose a major customer,
for example. Adopt strategies
to minimize your risk and plan
your reaction if a high risk event
happens.
Use alternative sales forecasts
DON TYLER, United States
and use MRP to run scenario plans
over this alternative demand.
Prepare an action plan for when
demand changes.
CHRIS BRAISBY, United Kingdom
“ The ability to link the sales forecast, capacity and
purchase contracts against price indicators. Plan
on more levels and handle the bottlenecks across
business units. Recalculate prices based on a change
in the price of raw materials with a time fence. ”
CLAUS CHRISTENSEN, Denmark
“ Demand planning tools have become both more
sophisticated, and easier to use. ERP systems have
a rich store of data on sales history, but typically do
not have statistical tools for analysis and prediction
based on that history. However, it is fairly easy to
pass that history off to a forecasting package that
can find a best fit model and then forecast demand at
multiple levels of hierarchy. So that sales forecasts
can be looked at any grouping levels that make sense
(location, customer group, product line, etc.). This
forecast serves as a starting point for a collaborative
effort to refine/adjust the forecast for new factors
that will cause the future to be different from the
past: new distribution channels, trade promotion
plans, new products, etc. Once the forecast has
been finalized, it can then be pushed back into the
ERP system to drive the planning functions (Master
Scheduling, Production Planning, and Purchasing).
The payoff is better customer service with less
inventory - which is huge! Many companies struggle in
the area of forecasting, and don’t realize the power of
the tools that are available today.“
JIM BRESLER, United States
Consider using end consumer sales
data (from point-of-sale tills) as
the basis for analysis and forecast
generation.
KEVIN BULL, United Kingdom
“ Planning can be simple and very complex. The most
important thing is to take all the factors that influence
the supply and demand into consideration. A relative
complex example could be planning done based on
purchase, inventory, production and sales taking
parameters such as catch weight, expiry date, as
well as marketing campaigns and seasonal changes
into consideration. A simple example could be that
only some of these are relevant to your business. It
depends on your business. ”
JOHN PETERSEN, Denmark
Plan based on historical trends,
current order book and future
forecasts. Some ERP solution hold
1. Analysis of historical data
this information centrally which
2. Use of better forecast tools - even
excel add-in like ‘Data Mining’ will help
allows for businesses to adapt
quickly.
MARTIN BURDEN, United Kingdom
ARVIND RAMESH, UAE
If demand is volatile, ensure you
can introduce new products very
quickly and don’t keep stock levels
too high.
WIM PLUIMERS, Netherlands
“ Focus the sales forecast on short term and long-term
forecasting. Also make the forecasting dynamic (for
example, 2+5: the forecast expectations for the
next 2 months and for the next 5 months), with the
possibility to update monthly. “
ERNESTAS ZABURAS, Lithuania
Our demands are fairly predictable
so I may not be as stringent as
others. I would keep a nine week
fence and track forecast to sales
using prior year as a base and
allow for 3-7% growth. Climate
affects our customers more than
anything else.
JON WELLS, United States
“ Predicting the future is difficult, however by aligning
sales and operations planning using order release
management (delivery rules, wave planning and task
management), you can counter this volatility to a
certain extent. ”
GUIDO VAN OSCH, Netherlands
Predicting the future is always
fraught with issues and a volatile
market place exacerbates the
difficulty. In businesses where
there are short term windows of
orders driven by large customers
for a diverse daily product range it
is all about data. For a food business
providing baked products to large
supermarkets the supermarkets order
within the lead time of the product,
meaning baking on a wide product
range commences in advance of the
order. Data is part of the solution
here, but not simply product sold
because the quantity is impacted by
weather, public holidays, economic
climate and a whole host of other
influencers difficult to predict.
However the data is critical, and year
on year the more data the better the
prediction. However this is not purely
a statistical solution, the figures are
presented and a human makes the
judgement based upon all of the
information available. In addition the
structure of the product can ease
the unpredictable nature. Creating
structures with base batches that can
be transformed into multiple products
means the base batch can be made
and when the order is known it can be
transformed into the required final
product. Management and analysis
smooths the unpredictable volatile
demands, but by the very nature of
the demand you will never be fully in
control of the supply-chain process,
you can only try to limit the impact on
your planning and execution.
STEVE WEAVER, United Kingdom
Use market analysis .
IMANTS SAKSS, Latvia
“ Market demand management is a question for the
marketers. Systems can help you to calculate the
amount of products required according to historical
data for a particular period, evaluating certain
parameters (production or delivery time, expiration,
inventory quantities in warehouse and in customer
sales points) more conveniently and faster. The
forecasting tool should be for the item group and not
for a particular item. “
RUTA GRIGIENE, Lithuania
Invest in a modern ERP system
with strong BI capabilities.
PER CHRISTENSEN, Denmark
“ Implementation of an efficient S&OP process is
important to manage the supply chain taking both
capacity and demand into the discussion. ”
HENRIK OXLUND, Denmark
Use the historical sales data
to create data cubes to use
as the basis of forecasting
Enhance ERP with built-in,
future demand, allowing future
transactionally based forecasting.
calculated trends to be stored and
Ensure full integration between
managed, to give a logical view
CRM and ERP.
of how demand may change over
BJØRN PEDERSEN, Denmark
time.
TONY CARLISLE, United Kingdom
“ Keep market data in your system so you have the
ability to analyze at a later time. We actually added
some additional fields to our market tables in order to
have historical market information to analyze. “
“ Accurate planning using min/max coverage group
enables planners to run master planning and make the
raw materials available just in time. “
SHAILESH GAJARALWAR, India
NATASHA PIJUAN, United States
HOW CAN COLUMBUS HELP?
COLUMBUS F&B
BENEFITS
Food and beverage companies have unique,
wide-ranging needs that go well beyond standard
Enterprise Resource Planning (ERP). Many food
companies often struggle to pull together “a system
that fits” with add-ons and costly customizations
within their core ERP application.
1. INTEGRATED SYSTEMS SMOOTHLY CONNECT ERP AND
ENTERPRISE ASSET MANAGEMENT PROCESSES.
The ERP system automatically triggers the maintenance
system with critical production information. Enterprise asset
management capabilities will then reserve the corresponding
downtime on your ERP production schedule.
ColumbusF&B enhances core ERP capabilities
to meet food-centric needs, and also builds in
industry-specific features traditionally found only in
third-party ecosystem solutions. Our goal is to deliver,
and continuously enhance, an affordable solution
that meets common requirements and scales and
upgrades with minimal customizations.
Our solution also includes the role tailored user
experience, multi-language and multi-currency
capabilities, and seamless integration with your
IT infrastructure. Columbus enables you to meet
customer demand, dissolve traditional barriers to
doing business, and adapt internal procedures to
create a lean, profitable environment—now and into
the future.
2. OPTIMIZE PRODUCTION SCHEDULING BASED ON PRODUCT
PROPERTIES SUCH AS COLOR AND FLAVOR.
ColumbusF&B integrates production and maintenance
scheduling to optimize capacity utilization.
3. PAY ON GRADE AND QUALITY OF RECEIVED PRODUCTS.
Settle payments to your growers and farmers based on actual
product characteristics by automatically calculating the price
based on quality data. Users can also adjust the base price and
add charges or deductions.
4. MANAGE POTENCY WITH EASE AND FLEXIBILITY.
View, value and work with potent items in inventory and
formulas—critical for organizations working in dairy, vinegar,
wine, beer and spirits. Revaluate potent inventory and pay
growers or vendors based on the potent content of their
supplied materials or ingredients.
5. ELIMINATE MANUAL, OFFLINE PROCESSES FOR
BATCH-BALANCING POTENT LOTS.
Achieve desired potency targets with automated processes
that let people view, select, blend, and balance lots while
working directly in your ERP solution.
The full ColumbusFood solution includes our best practice business process
modeling with RapidValue, our own Food and Beverage and Supply Chain Solution
modules, Microsoft Dynamics AX, and our proven implementation methodology,
SureStep+.
A big THANK YOU to everyone
who has contributed to the Food
Notes from the Field including:
Arvind Ramesh, Bjørn Pedersen, Chris
Braisby, Claus Christensen, David Moodie,
Don Tyler, Ernestas Zaburas, Geeta G.
Cohli, Guido van Osch, Henrik Oxlund,
Imants Sakss, Jim Bresler, John Petersen,
Jon Wells, Josh Sanders, Kevin Bull, Lisa
Hammond, Martin Burden, Martin Clothier,
Mike Greenway, Natasha Pijuan, Per
Christensen, Philip Bruns, Ruta Grigiene,
Shailesh Gajaralwar, Steve Weaver, Svetlana
Kondakova, Terry Coult, Tony Carlisle, Tony
Farr, William Lloyd and Wim Pluimers.
The ColumbusFood Notes From The Field Series:
Volume 1
Volume 2
Volume 3
Volume 4
Volume 5
Volume 6
Product Recall
Predicting
Demand
Perishable Items
Supply Chain
Business
Processes
Food Safety
For more information on Columbus, our clients’ experiences and our solutions, please visit www.columbusglobal.com
ABOUT COLUMBUS:
Columbus is the preferred business partner for ambitious companies worldwide
within the food, retail and manufacturing industries. We exceed 20 years of
experience and 6.000 successful business cases, and we’re proud to offer our
customers solid industry know-how, high performance solutions and global reach.
’Columbus’ is a part of the registered trademark ‘Columbus IT’