Forecasting, planning for and managing the productsservices demand Balancing the customers requirements with the company’s capabilities of the supply chain and financial status Forcing the supply chain to collaborate on activities related to the the flow of productsservices, information, and capital. Vinamit proactively set up close collaboration among management, inventory, supply chain, and their marketingsales teams.
VINAMIT-JACKFRUIT CHIPS LINE SUPPLY CHAIN PROCESS 01 Demand Management 02 Group 2Team Procurement 03 04 05 Packaging Distribution Warehousing Vinamit Company background Established in 1991; Chairman Nguyen Lam Vien, with processing plants and farms in Binh Duong province One of the leading companies in the agricultural food processing industry in Vietnam Since 2005, received the reward of “ The best of Vietnam’s goods by Vietnamese consumers" Continually expands to ASEAN countries, China, and even difficult countries such as Japam, Europe and the United States DEMAND MANAGEMENT What is demand management? Forecasting, planning for, and managing the products/services demand Balancing the customers' requirements with the company’s capabilities of the supply chain and financial status Forcing the supply chain to collaborate on activities related to the flow of products/services, information, and capital Vinamitproactively set up close collaboration among management, inventory, supply chain, and their marketing- sales teams 1st MANAGERIAL RESPONSIBILITY DEMAND FORECASTING Demand Forecasting Reviewing & Analyzing historical and realtime sales data seasonal or economic trends Researching and analyzing internal and external demand-influenced factors => Proving accurate estimation and prediction of customers’ demand for future sales preparation Use skills & experience, and information gathered from the product Quantitative Methods Use time series forecasting data), and analytical tools predictions for future (historical to create Analyze customers’ demand volatility based on forecasting factors: random variations, trends, seasonal patterns, and business cycles Qualitative Methods Statistical Forecast Used when Vinamitaims to bring its jackfruit chips widely to new markets with minimal past data available to analyze Vinamit Demand forecasting case Main targeted customers: young people and foreign visitors The changing in young customers eating traits that increase packaged food and fruit snacks The peak time period for tourism and foreign visitors is months (Spring to Summer) => Based on previous young traits changes (historical data), Vinamit forecasts for increasing jackfruit chips supply in the future periods for months => Based on peak time tourism in the past => increasing sales in months (Spring- Summer) Increasing demand for tropical fruit snacks in China and Europe since 2018 Their changing eating habits (modern trends) => rising demand for healthier snacking options in Europe and a decrease in consumption of sweet snacks with high calories Tropical fruit chips (jackfruit, banana, pineapple) exported to Europe increased by 7% => Based on historical data (2018), Vinamit can forecast to increase sales and exporting volume in thenext period:1-2years An accurate demand forecasting drives What Vinamit’ssupply chain can receive Provide predictive foundation background and throughout demand understanding 01 Optimize and synchronize almost crucial supply chain stages of the dried jackfruit line 02 VALUE 03 04 Help supply chain schedules able to work on time, in full, maximize SC efficiency, and optimize marketing and sales activities for more profit gains Minimize stock-outs & reduce the excess inventory and warehousing costs in case of oversupply of stock Help demand management proactively influences demand Help demand management smoothly communicates with other stages KPI accuracy (FA) Demand forecasting Gains ❑ Having benchmark for Vinamit accurately its a predictions for demand and sales ❑ Be more confident to use the forecasts in reporting and make the next short-term forecast demand Forecast accuracy (%) ={1 –[Absolute value of (Actual sales for time period – Forecast sales for same time period) / Actual sales for time period]} x 100 MEANING Calculate the deviation of the actual demand from the forecasted demand, check forecast accuracy before reporting for plans ❑ Benchmark ❑ ❑ Newly-launch product => Minimal historical data: Forecast accuracy from 80% => Good Large variations due to weather, seasonal, competitor promotion => FA is recommended from 90-95% for a useful forecasting Finally, product lines with a long sales history like dried jackfruit of Vinamit should target an FA of 90% or better to ensure an exact forecast KPI WORKS Good or not Forecasting Accuracy (FA) KPI Shortcomings ❑ Not 100% accuracy ❑ Use to calculate in the short-time period ❑ Easy prone to error when demand fluctuates when the actual sales are affected by unexpected variations like Covid-19, or economic crisis => Provides a fragmented, short view of forecasting accuracy in different periods, difficult to plan for the long term Recommendation Have the connection between forecasting accuracy of the different periods to have a comprehensive view of demand inlong run 2nd MANAGERIAL RESPONSIBILITY DEMAND PLANNING Create and execute strategic and operational plans across the supply chain in order to meet customer demand Collaborate with the Demand Forecasting Team, Sales and Marketing, and Financial department to facilitate balanced plans for S&OP processes Manage and communicate with other SC departments for on-time and in-full supply Demand Planning What Vinamit’ssupply chain can receive 01 02 Helps track and maintain supply levels Ensure Vinamithas enough supplies to meet actual demand Balance supply-demand status Drives transparency in volumes and healthy stocks at the right time for future sales match through practical planning strategies VALUE 03 04 Help Demand managers effectively communication with other stages to prepare for their processes Increase efficiency, probability, and customer satisfaction in production Reduce unexpected operation costs ▪ ▪ Examples Minimize excess storage costs Helps with logistic planning Demand Planning KPI Mean Absolute Percentage Error (MAPE) Forecasting Error = Actual sales –Forecast sales Mean absolute percentage error = Sum of (Forecast error for the time period / Actual sales for that period) / Total number of forecast errors x 100 MEANING This defines the average of percentage errors (Take the average of the difference between actual and forecasted demand as % ❑ Good ❑ ❑ The advantage of MAPE is that it relates each forecast error in different periods to its actual observation This accuracy has the advantage of scale Give a more precise value, take into account every value in list ... Continually expands to ASEAN countries, China, and even difficult countries such as Japam, Europe and the United States DEMAND MANAGEMENT What is demand management? Forecasting, planning for, and managing... RESPONSIBILITY DEMAND PLANNING Create and execute strategic and operational plans across the supply chain in order to meet customer demand Collaborate with the Demand Forecasting Team, Sales and Marketing,... influences demand Help demand management smoothly communicates with other stages KPI accuracy (FA) Demand forecasting Gains ❑ Having benchmark for Vinamit accurately its a predictions for demand and