Organizational Demand Planning preparedness: Future Planning

a) Get the process right. The most important thing we need understand is that, Demand planning is a process within sales and operations planning or integrated business planning, not a stand-alone activity. Create an integrated business plan that is a cross-company activity and drives the rest of the business forward for profitably meeting customer demand.

b) What levels you need to plan demand at that make sense for your business. This is an important decision to make i.e. some companies analyze and plan demand at the product family level, customer level or geographic level. The way you forecast and plan demand is unique to your business. Don't be dictated by limitations of your IT technologies -- and be prepared to change how you plan demand according to changes in your business.

c) Demand planning is a collaborative process, not a test of statistical algorithms. The statistics provide a solid foundation to work with, but the real value comes from over-laying knowledge that systems cannot possibly know. Deploy internal collaboration before external collaboration, recognizing that the closer you get to the true demand signal, the better the forecast will be.

d) Demand planning is not just forecasting. Forecasting is a component of demand planning and relates to your best estimate of future demand. Companies that excel in this area will challenge the forecast (and the integrated business plan) and seek opportunities to influence demand through marketing events and promotions to bring the forecast more in line with the company plan.

e) You can't control what you can't measure. Put the right set of linked key performance indicators in place and measure regularly against these.

f) Educate before training. Because the demand planning process is cross-functional, many people input to the forecast without realizing the importance of their contributions. As a result, the quality of their contributions may suffer. A good educational program will help everyone understand their contribution and impact on the performance of the demand plan.


g) Cleanse the data. Don't spend all your time questioning it and losing confidence in the process, which can create a breeding ground for others to second-guess the demand plan and produce their own version. Demand planning deals with huge quantities of data and robust processes are required to keep the data cleansed.

h) Trust the numbers and manage by exception. 80% of your return can be achieved by reviewing 20% of the items.

I) Use the error in your forecast to positive effect. A good statistical forecast will have an appropriate error which drives an appropriate safety stock target. This leads to good inventory management and delivers higher service with lower total inventory.

J) Deploy a proven best-in-class solution. A recent Aberdeen study shows that companies that excel in demand management -- reporting higher forecast accuracies and lower inventories -- are two-and-a-half times as likely to have implemented a best-in-class demand planning system.

Supply Chain Management – Today’s Mantra

The principle of ‘Survival of the fittest’ remains valid in the present global economy characterized by the presence of ever changing business environment. Every modern company needs to struggle for the existence & growth under such a competitive environment. One surest way to achieve this is to offer best quality of product at reasonable rate, which suits well to the requirements of target customer. To impart a feeling of delight in the minds of consumers and provide quality product at reasonable price manufacturer has to bring shift in his emphasis from mere cost ascertainment to cost reduction to reduce cost of production. Thus, cost reduction is the main managerial mantra as once quoted by all well-known strategists. There are number of strategic cost management techniques available like Supply Chain Management (SCM) , Business Process Re-engineering (Value Re-engineering), Total Productive Maintenance to reduce cost. Of these Supply Chain Management is prominent tool to reduce cost.


Supply Chain Management has become a very powerful technique as it increases the responsiveness to the changing business conditions and enhances the competitiveness of the organization. In today’s intense competition, and increasingly global economy, to survive and grow, organization must enhance their market responsiveness and become cost competitive. The supply Chain framework is a method of breaking down the linked set of value creating activities from basic raw material/component supplier to the supply of the end product to customer/consumer.


A supply chain is a business process that links manufacturers, retailers, customers and suppliers in the form of a chain to, develop and deliver products as a single virtual organization of pooled skills and resources. Supply chain management is process of synchronizing the flow of physical goods and associated information from the production line of low level component suppliers to the end consumer, resulting in the provision of early notice of demand fluctuations and synchronization of business processes among all the co-operating organizations in this supply chain.





Supply Chain & Cost Reduction Solutions:
SCM aims at cost reduction without affecting quality. SCM strategy is to reduce cost by eliminating all non value added activities in the flow of goods from Raw material supplier to End consumer. The Objective of SCM is to increase the competitive advantage of the channel as a whole. The means to accomplish this objective is through creating customer value superior to the competitor’s value offering and, thus, to enhance customer satisfaction, either through improving efficiency (lower cost) or effectiveness (added values at the same cost).



Decisions in supply chain management:
Decisions for supply chain management can be classified into two broad categories - strategic and operational. As the term implies, strategic decisions are made typically over a longer time horizon. These are closely linked to the corporate strategy and guide supply chain policies from a design perspective. On the other hand, operational decisions are short term, and focus on activities over a day-today basis. The effort in these types of decisions is to effectively and efficiently manage the product flow in the ” strategically” planned supply chain.









Four major decision areas on supply chain management are:
(1) Location
(2) Production
(3) Inventory
(4) Distribution

Location decisions: The geographic placement of production facilities, stocking points, and sourcing points is the natural first step in creating a supply chain. The location of facilities involves a commitment of resources to a long-term plan. Once the size, number, and location of these are determined, so are the possible paths by which the product flows through to the final customer. Although location decisions are primarily strategic, they also have implications on an operational level.

Production decisions: The strategic decisions include what product to produce, and which plant to produce them in, allocation of suppliers to plants, plants to Distribution Channel’s(DC), and DC’s to customers markets. These decisions have a big impact on the revenues, costs and customers service level of the firm. These decisions include the construction of the master production schedules, scheduling production on machines, and equipment maintenance. Other considerations include workload balancing, and quality control measures at a production facility

Inventory decisions: These refer to means by which inventories are managed. Inventories exist at every stage of the supply chain as either raw material, semi-finished or finished goods. They can also be in process between Locations. Their primary purpose to buffer against any uncertainty that might exist in the supply chain. Since holding of inventories can cost anywhere between 20 to 40 percent of their value, their efficient management is critical in supply chain operations. It is strategic in the sense that top management sets goals.

Transport decisions: The mode choice aspect of these decisions are the more strategic ones. These are closely linked to the inventory decisions, since the best choice of mode is often found by trading-off the cost of using the particular mode of transport with the indirect cost of inventory associated with that mode. Customer service levels, and geographic location play vital roles in such decisions. Since transportation is more than 30 percent of the logistics costs, operating efficiently makes good economic sense. Shipment sizes (consolidated bulk shipments versus Lot-for-Lot), routing and scheduling of equipment are key in effective management of the firm’s transport strategy


Why Supply Chain.
The importance and need of SCM will increase in the future. Customers will demand faster, timelier delivery of orders. Manufacturing will expect greater knowledge of order requirements to better plan its operations and procurement processes. Similar expectations apply to external entities. This need for increased coordination among customers, suppliers and service providers dictates greater visibility and collaboration throughout the supply chain.
Dynamic business environment characterized with Time-based competition, Synchronization with other corporate functions, Service customized to specific markets and customers, Increased consolidation of suppliers and service providers, Further privatization and deregulation, Continued emphasis on outsourcing, Development of performance measures encompassing supply chain partners, Increased collaboration between supply chain partners, and Electronic commerce to enable communications throughout the supply chain will increase the need of of supply chain.

Evolution of Supply Chain Management:

1. Span of Responsibility
Earlier: The components of SCM traditionally were viewed as “functional silos” and typically included outbound transportation (i.e., customer delivery); field warehousing and finished goods inventory management.

Present: Today’s SCM executive generally has a much broader range of responsibilities. that the majority of these executives have responsibility for transportation, ware-housing, inventory management , customer service , purchasing / sourcing, demand planning, production planning/scheduling and international logistics.

2. Organizational Position:
Earlier: SCM traditionally was viewed as a cost center, adding little or no tangible value to bottom line results. Individuals responsible for SCM were typically at the manager level, reporting to directors or vice presidents responsible for operations, marketing or other functional areas.

Present: SCM executives are now well positioned. Executives in charge of marketing / sales, manufacturing and other departments are now generally peers rather than reporting officials. In recent survey it is observed that In U.S. companies, 52 percent of SCM executives report to an Executive Vice President or COO/CEO. In Asia, this percentage was slightly lower (48 percent); in Europe this percentage was only 31 percent.

3. Education and Training
Earlier: Historically, relatively few universities offered SCM education. In these institutions, the academicians who taught SCM coursework were usually housed within a larger department, e.g., Operations or Marketing. Some schools offered continuing education and seminars in SCM, but these forums generally focused on a specific aspect of SCM, such as carrier negotiations, inventory management techniques, warehousing and material handling systems and international trade

Present: Today, there are numerous, well-recognized universities–in the U.S. and abroad–offering degrees at all levels in the field of SCM. A recent CLM listing identified nearly 50 institutions with SCM-related curricula. Continuing education seminars and workshops with SCM themes abound.

4. Contributions to Corporate Performance
Earlier: Historically viewed as a cost center, SCM contributions at the corporate level were judged to be minimal. Since reporting systems focused on managing operational-level activities, any strategic value associated with SCM was difficult to quantify.
Present: Leading-edge manufacturers report SCM costs between 4 percent and 5 percent of sales, compared to the industry average of 7 percent to 10 percent Successful SCM can improve delivery performance by 25%, reduce inventory levels by as much as one-half and enhance overall productivity by at least 15 percent.
To conclude, In this dynamic market place, the equations are kept changing very fast with the leaders of yesterday being displaced by the fast-paced and agile new entrants. Intense competition, demanding customers, shrinking product life cycles, rapid advances in technology- all these factors are fast changing the competitive dynamics in global environment. This volatile business environment is making it harder than ever for marketers compete effectively. The traditional approaches are too slow to keep pace with the evolving global complexity. These developments are putting pressure on business community to look at the each and every components of business like procurement, logistics, marketing etc. Effective linking of functions of these processes puts companies in strategic position. Every link in SCM can add up to a competitive advantage. Time was when companies looked at their supply chains as a means of focusing on their own core competencies, of leveraging those of vendors, of lowering their costs, and of becoming more responsive to customers. Those goals won’t be swept away by the supply chain in the new millennium. But they will be superseded by a singly super-objective: competing on the basis of how well companies’ manage their supply-chain.

Practical Behavior Improvements

A) OBSERVE HOW THINGS GET DONE:
Knowing the game inside out is the key to winning it. Don’t be afraid to ask some key questions to your bosses, like for example, about values and vision.

Are short or long-term results most valued? How are decisions made? How much risk is tolerated?

The answers to these questions should give you a good sense of the CULTURE of the Organization.


B) PROFILE POWERFUL INDIVIDUALS:
Okay, this is important, if you dream to be an achiever then pay attention to your boss’s communication style, network of relationships and what type of proposals they say. Emulate those traits in your strengths.


C) DEVELOP A POSITIVE TRACK RECORD:
PLANNING is crucial as soon as you join the company.
If you have a rough idea on how long you want to do the job, work on developing your image as someone who gets results. This will give you an edge in all Political corners. On the other hand, style without substance will not gain you respect, especially in organizations that focus on outcome.


D) BLOW YOUR HORN, OCCASIONALLY:
We’re not saying you start an outright show-off, but if no one knows of your good work, you may lose at the game of office politics – when you really DESERVE to win.

Let others know what you’ve accomplished whenever you get the opportunity.

If you don’t know the fine art of diplomatic bragging, you might get lost in the shuffle of your co-workers.

E) RESPECT COUNTS, ESPECIALLY DOWNWARDS:
It is no new rule to treat your superiors with adequate greetings, but few executives make the folly of behaving with their co-workers and subordinates in a manner a king rules over his “jagir”.

Don’t show preferential treatment or give the heat to co-workers you think won’t be of use to you.

You never know to whom someone might be connected, and rude behavior may come back to bite you.

F) DON’T ALIGN TOO MUCH WITH A GROUP:
While an alliance where that smart CEO is calling the shots may be powerful for the moment, new leaders will often oust existing coalition and surround themselves with a new team.

Bridging across factions may be a more effective strategy for long-term success if you intend to stay in your current organization for some time.

G) COMMUNICATE PERSUASIVELY:
No matter how intense the politics is at your office, developing an assertive style backed with solid research will always give your colleagues and superiors a positive feeling, even if they’re after you.

Remember, Good leaders always adjust their message for their audience and are well – prepared.

MANAGERIAL & LEADERSHIP SKILLS - 2

Management and leadership are both important, as leadership complements management, it doesn’t replace it.

“Throughout life, we will be called to play many roles. Two of the most important work roles relate to that of leader and manager.”

“Some leaders cannot manage - some managers cannot lead” You need a solid balance of both management and leadership skills to reach your greatest potential.”

Common Activities of Managers focuses more on:
Planning
Organizing,
Controlling
Coordinating
Directing
Resource use
Time management
Logistics and the supply chain
Finance and money management
Budgeting
Strategy
Decision Making
Problem Solving

Leader’s focus more on:

Vision
Inspiration
Persuasion
Motivation
Relationships
Counseling
Coaching
Teaching
Team work
Listening

Here are some key points The Manager maintain the status quo, the Leader promotes change:-

The Manager accepts the status quo, the Leader challenges it

The Manager administers, the Leaders innovates

The Manager is a copy, the Leader is an original

The Manager focuses on systems and structure, the Leader focuses on people

The Manager relies on control, the Leader inspires trust

The Manager has a short-range view, the Leader has a long-range perspective

The Manager ask how and when, the Leader asks what and why

The Manager has their eyes on the bottom line, the Leader has theirs on the horizon

The Manager imitates, the Leader originates

The Manager is the classis good soldier, the Leader is his own person

The Manager does things right, the Leader does the right things

I’ve learned as a manager, as well as an employee having a manager, that most people do not want to be managed, they want to be led! If you want to manage someone, you have to be able to manage yourself. You can’t lead someone if you cannot manage yourself.

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“The Boss & You”

i There is no magic stick available, nor written in any book so as to how best you can manage your bosses.

Approach to the boss is important, they are people and had a lot of experience of past, follows the rules of engagement they have been taught, considering the facts it’s becomes all the more important to know about there past experiences and take things accordingly.

One of the possibility which researchers talk about is that sometime Big bosses are mystified by layers of misinformation, gossip and fantasy about who and what they are. In this case the essential point is that sub-ordinate should filter out the noise and make its own independent analysis and keep it till yourself and align its own strengths and weaknesses with his real needs. You may later adjust it according to the pretty sounding objectives outlined in corporate brochures.

For example – You may be good at working under pressure, but hate detail planning. While it may seem necessary to appear structured and systematic if your boss likes order, always look for opportunities to shine, and emerge as a crisis management hero.

Here by mentioned are certain TIPS which might be helpful in coming days.

1) SOCIAL DIRECTOR - He has strong views on everything your hairstyle, your dress, your food habits, your friends etc.
TIP – Don’t react. Be calm; avoid doing stuff that he strongly dislikes. Know that he is a boss who still believes in hierarchies.

2)I THE GREAT – They think they are god gift’s to mankind so praise him, gush over his new presentation and keep a daily dose of compliments ready. Find out about his passion and weaknesses, eulogize him depending upon his mood on his new projects, his mobile, and other stuff he has.
TIP - Be generous and innovative about your compliments. Such bosses like small talks and indulge in them, no matter how frivolous.

3) MR. RIGHT – He is the boss and you are the sub-ordinate relationship is very clear. He will take all the decisions good/bad, successful/failure are presumed good for the company and you.
TIP – He hates taking no for a answer so master the art of saying “no” without uttering it. You will do well as long as you are willing to be a good listener and an executioner.

4) FOG MAKER – Will keep things hazy, unclear, and tentative, will keep you guessing, so when a move backfires, he might be the first to tell you “I didn’t mean that”.
TIP – Learn the art of cc-ing on email. Spell out points of discussions and actions weighted explicitly on email.

5) DREAM BOSS – Rare but real. He is a professional, a good human being, a great mentor. He will value your time and give you space. He knows how to handle the super boss. He will give you credit where you deserve and take the flak when things are difficult. He may be your boss but his leadership qualities attract others to seek his advice.
TIP - Just be yourself and njoy till it lasts. Being honest and transparent will be critical. Try and cultivate a mentor – ideally boss pear or a super boss to manage. Quitting as the last option always exist
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UNDERSTANDING SUPPLY CHAIN RETAIL & MANUFACTURING

In Retail industry the primary investment is in the merchandise flowing through its network, at rest or in motion. Exclude any real estate assets from this discussion as these are not core to supply chain operations. Whether a retail company owns the stores, or leases them, does not impact its operations substantially. Therefore managing this asset (inventory in the network) becomes core to a Retailer’s success. That is why the Retail supply chains are distribution focused. After the cost of merchandise, the largest overheads in retail are related to their stocking and distribution of goods. So much so that GMROI for Retailers is quite commonly interpreted and computed as Gross Margin Return on Inventory (as against Gross Margin Return on Investment).
A lean distribution chain means optimal services levels between the supplying and consuming network nodes and a higher inventory turns. The level of inventory directly affects the operational cash-flow and ability to service customers – and both these competing needs must be managed effectively.

In a Manufacturing industry /environment the goods (raw materials as well as finished goods) within the network are a large investment, but another substantial investment is in manufacturing/process equipment, and resources. All equipment gets depreciated over time irrespective of the percentage utilization. However such equipment adds value to a manufacturer’s operations only when it is being utilized. Therefore manufacturers must worry about maintaining optimal levels of inventory to maintain the services levels among the supplying and consuming network nodes but also about keeping the equipment and resources effectively utilized. In doing so the focus of the supply chain changes considerably from being distribution focused to being asset focused. This introduces the need for manufacturing planning, scheduling and sequencing so that all manufacturing operations as well as transportation operations are optimally planned for best use of resources.

Network:
Another difference that accentuates the different core requirements for the Retail and Manufacturing supply chains is simply the size of the network. A retailer’s network typically consists of multiple warehouses, and a large number of retail locations that may run into thousands. A manufacturer on the other hand will normally have only a handful of manufacturing locations and warehouses. Therefore managing the flow of material (merchandise, raw materials, or finished goods) through this network through optimal transportation, and warehouse planning becomes much more important in a retail environment.
Also the sheer number of items dealt within the Retail environments is huge compared to most Manufacturing environments (exceptions exist). This adds a large number of vendor shipping locations to the network making it unwieldy and complex for retailers.
As above, Retailer’s network primarily consists of storage locations (such as warehouses) and selling locations (such as stores). A Manufacturer’s supply chain network primarily consists of storage locations (warehouses for raw materials, or finished goods), and manufacturing locations (factories). An extended network for both the environments can model the vendor’s shipping points as well.

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KUNAL BHASIN

INDEX FACTOR

Many people see the sensex levels and make there investments, but we need to be aware of the fact that how the sensex level is calculated.

I am here by sharing my findings on the small topic; hope this information will be beneficial for the readers and investors.

Sensex is basically calculated on the Free-Float Market Capitalization methodology
As per this the level of index at any point of time reflects the Free-Float market value of
Selected front line stocks, the market capitalization of a company are determined by multiplying the price of its stock by the number of shares issued by the company. This
Market capitalization if further multiplied by the free-float factor to determine the free
Float market capitalization.

Example: - A&B is two different stocks.

Suppose Company A has 1000 shares in total, of which 200 are held by the promoters, so that only 800 shares are available for trading to the general public. These 800 shares are the so – called “free-floating” shares.

Similarly, Company B has 2000 shares in total, of which 1000 are held by the promoters and the rest 1000 are free-floating.

Suppose the current market price of stock A is Rs 120. Thus, the total market capitalization of company A is Rs 120,000(1000 x 120) but its free-float market capitalization is Rs 96000(800x120).

Similarly, suppose the current market price of stocks B is Rs200. The total market capitalization of company B will thus be Rs 400000 (2000x200), but its free-float market cap is only Rs200000 (1000x200).

So as of today the market capitalization of the index (i.e. stocks A & B) is Rs 520000 (120000 + 400000), while the free-float market capitalization of the index is Rs 296000 (Rs96000 + Rs200000).

The Year 1979 is considered the base year of the index with a value set to 100. What this means is that suppose at that time the market capitalization of the stocks that comprised the index then was, say 60000( with some +/- of old new stocks, does not matter much) then we assume that an index market cap of 60000 is equal to an index-value of100.
Thus the value of the index today is = 296000 x 100/60000 = 493.33

Thus the value of sensex is calculated

The factor 100/60000 or 0.001667 is called the index divisor or factor.