1 Introduction

21

1.1 Defining Demand Management

22

1.2 The Relevance of Managing Demand

24

1.3 The Balance Sheet and the Income Statement

27

1.4 The Role of Demand Management within Sales and Operations Planning

29

1.5 SAP Solutions Overview

30

1.6 Summary

33

2 Projecting Demand

35

2.1 Assembling the Parts into a Whole

35

2.2 Ascertaining the Size and Shape of a Market

38

2.3 Sales and Operations Planning within APO Demand Planning

41

2.4 Summary

43

3 Engaging in Demand Planning

45

3.1 How Companies Engage in Adopting Demand Management

45

3.1.1 Process

48

3.1.2 Technology

49

3.2 Finding the Value to Create a Business Case

50

3.2.1 Deliverables

55

3.2.2 Engagement Plan

56

3.2.3 Process

57

3.2.4 Case Study

63

3.3 What SAP Solutions Can Support This

65

3.3.1 SAP Business Suite for Demand Management

66

3.3.2 Core Demand Planning with SAP ERP

68

3.3.3 SAP Supply Chain Management (SCM

69

3.3.4 Advanced Demand Planning with SAP APO

70

3.3.5 Composite Demand Planning with Duet and SAP SCM

73

3.3.6 Easy to Use Planning Sheets

74

3.3.7 Flexible and Efficient Planning

75

3.3.8 Customer Collaboration Using SAP Supply Network Collaboration

76

3.4 Summary

77

4 Statistical Forecasting

79

4.1 Looking Back to See Ahead

79

4.2 Basic Statistical Forecasting Algorithms

81

4.2.1 Constant Demand

82

4.2.2 Trend Demand

83

4.2.3 Seasonal Demand

84

4.2.4 Seasonal Trend Demand

85

4.2.5 Lumpy Demand

85

4.2.6 First-Order Exponential Smoothing

86

4.2.7 Second-Order Exponential Smoothing

90

4.2.8 Model Fit: Ex-Post Forecast and Outliers

91

4.3 Planning Books

94

4.3.1 Data View

95

4.3.2 Selection Profile

95

4.4 Summary

99

5 Interactive Planning and Advanced Statistical Forecasting

101

5.1 Characteristic Combinations and Data Selections

101

5.1.1 Introduction to Characteristic Combinations

102

5.1.2 Creating Characteristic Combinations

103

5.1.3 Displaying Characteristic Combinations

107

5.1.4 Data Selections in Interactive Demand Planning

108

5.2 Statistical Forecast: Core Functionality Setup

111

5.2.1 Forecast Profile

113

5.2.2 Executing the Forecast

118

5.3 Running the Forecast in Interactive Planning

121

5.3.1 Forecast View Tabs

124

5.3.2 Forecast Comparison

129

5.4 Using Like-Modeling and Phase-In/Phase-Out to Support Product Planning Across Its Lifecycle

131

5.4.1 Like-Modeling

132

5.4.2 Phase-In/Phase-Out Modeling

133

5.5 Incorporating Custom Forecasting Algorithms

138

5.6 Statistical Forecasting in SAP ERP and SAP APO

139

5.7 Summary

143

6 Leading Indicators

145

6.1 Examples of Business Indicators

145

6.2 Complementary Products

147

6.3 Causal Forecasting in SAP APO Leveraging Multiple Linear Regression

148

6.3.1 Data Requirements

149

6.3.2 Executing the MLR Forecast

151

6.4 Summary

153

7 Downstream Demand

155

7.1 Vendor-Managed Inventory and Collaborative Planning, Forecasting, and Replenishment Leveraging SAP APO

155

7.2 CPFR Process Overview

157

7.2.1 Stage 1: Initial Agreements

159

7.2.2 Stage 2: Forecasting

160

7.2.3 Stage 3: Replenishment

162

7.2.4 CPFR: Revised Model

163

7.3 Comparison of VMI and CPFR Processes

165

7.4 Collaborative Planning Process in SAP APO

167

7.4.1 Collaborative Demand Planning Process in SAP APO

169

7.4.2 Settings for Collaborative Demand Planning in SAP APO

171

7.4.3 VMI Process in SAP APO

176

7.5 Consumption Data and the Vision Chain Demand Signal Repository

183

7.6 Customer Collaboration with SAP SNC

187

7.6.1 Generating Forecasts in SAP SNC

188

7.6.2 Collaborative Sales Forecasting (CSF)

191

7.6.3 Settings for Consensus Finding Framework

194

7.6.4 Collaborative Sales Forecasting Process

196

7.6.5 Short-Term Forecasting Process

198

7.6.6 Replenishment Planning

201

7.7 Summary

202

8 Marketing

205

8.1 The Gap Between Projections and Expectations

206

8.1.1 Pulling Demand Forward

206

8.1.2 Increasing Your Market Share

208

8.2 The Four Ps of Marketing

215

8.2.1 Product

216

8.2.2 Pricing

216

8.2.3 Placement

217

8.2.4 Promotion

218

8.3 Promotions in SAP APO

219

8.3.1 Promotion Planning Process: Overview

219

8.3.2 Promotion Base

219

8.3.3 Cannibalization Group

221

8.3.4 Create Promotional Planning in SAP APO

222

8.3.5 Postpromotion Evaluation

227

8.3.6 Promotion Reporting

230

8.4 Promotional Forecasting in Customer Collaboration

232

8.4.1 Promotion Planning in SAP SNC

232

8.4.2 Maintaining Promotion Patterns and Event Types

237

8.4.3 Maintaining Offset Profile

239

8.4.4 Assigning Promotion Parameters

241

8.4.5 Create Promotional Planning in SAP SNC

242

8.5 Summary

244

9 Sales

245

9.1 Guidance, Incentives, and Information

246

9.2 Configuring SAP APO Demand Planning for Sales Input

247

9.2.1 Designing Planning Books and Layouts for Sales Input

248

9.2.2 Assigning Users to a Data View

250

9.2.3 Creation of Consensus Demand Plan

251

9.3 Sales Input through Duet Demand Planning

254

9.3.1 Working with Duet to Input Sales Data

255

9.3.2 Planning Sheets

255

9.3.3 Designing Planning Sheets Using the Wizard

256

9.3.4 Sales Input through Planning Sheets

258

9.4 Summary

260

10 Pulling It All Together

261

10.1 Map, Mirror, Headlight, and GPS

261

10.2 Consensus Demand Planning

262

10.3 Demand Combination in SAP APO

269

10.4 Summary

274

11 Realize Demand

275

11.1 The Balance Sheet and the Income Statement

275

11.2 Strategic (Long-Term) Decisions

278

11.3 Operational (Medium-Term) Decisions

280

11.4 Tactical (Short-Term) Decisions

284

11.5 Impact of Downstream Events on Demand Management

285

11.6 Operationalizing the Demand Plan

293

11.6.1 Supply Network Planning (SNP

293

11.6.2 Materials Requirement Planning (MRP

300

11.6.3 SAP APO Global Available-to-Promise (GATP

303

11.7 Summary

305

12 Process and Performance Management

307

12.1 Identify and Confront Bias

307

12.2 Assigning Responsibility for Accuracy

309

12.3 Absolute and Weighted Metrics

309

12.4 Lagged Accuracy

313

12.5 Reporting Forecast Accuracy with SAP APO and SAP NetWeaver BW

314

12.5.1 Steps for Extracting Planning Data

315

12.6 Summary

328

13 Managing a Change Process

331

13.1 Selecting a Team or Partner

331

13.1.1 Different Types of Implementation Partners

331

13.1.2 What to Look for in an Implementation Partner

333

13.1.3 Importance of Implementation Methodology

336

13.2 Governance Model

337

13.2.1 Project Governance Framework

339

13.2.2 Key Elements of Successful Project Governance

343

13.3 Sequencing and Scope of Solutions Implementation

345

13.3.1 Quick Benefit Realization

345

13.3.2 Minimizing Change Management

346

13.3.3 Minimizing Rework

346

13.3.4 Staffing Constraint

347

13.4 Project Management Methodology

348

13.4.1 ASAP Toolset

349

13.5 Global Engagement Delivery Model (GEDM

350

13.5.1 GEDM: Assessment and Discovery Engagement

351

13.5.2 GEDM: Blueprint

352

13.5.3 GEDM: Realization

354

13.5.4 GEDM: Go-Live Preparation

356

13.5.5 GEDM: Go-Live and Support

356

13.6 Defining Project Success Criteria

357

13.6.1 Financial and Operational Metrics

358

13.6.2 Stakeholder Satisfaction

359

13.6.3 Meeting Project Objectives and Requirements

359

13.6.4 Within Budget

360

13.6.5 Within Timelines

360

13.6.6 Value Added to the Organization

360

13.6.7 Quality Requirements

361

13.6.8 Team Satisfaction

361

13.6.9 Relationship with the Consulting Partner

361

13.6.10 Ability to Sustain the Implementation Successfully

361

13.6.11 Ability to Be a Customer Reference

362

13.7 Tracking the Value

362

13.8 Summary

363

14 Conclusion

365

14.1 Financial and Strategic Implications of Managing Demand

365

14.2 Project, Impact, Realize, Correct

366

14.3 SAP Solutions

369

14.4 Case Study

371

14.5 Benefits of Demand Planning Systems

373

14.6 Summary

377

Appendices

379

A Business Planning

379

A.1 Expectations and Guidance by Public Companies

379

A.2 Establishing the Product Mix

381

A.3 Setting Sales Targets

382

A.4 Business Planning and Consolidation

387

A.5 Summary

387

B The Authors

389