Popular DP Key Figures in CPG orgs.

[Former Member]

Dear DP Business Experts,

If you were to propose top 10 calculated key figures/metrics in a standard APO DP implementation, what we be they. You are free to make assumptions. What I am looking for are numbers that made sense for planners to arrive at a good demand plan and also achieve some objectives like reducing avg inventory. The products I am talking of are packaged snack foods and beverages. Assume make to stock largely and some sales against orders. Promotions and life cycle planning will be used. No collaborative planning.

Here are some I am considering. Some of them may sound like supply side numbers but there is no reason I see in not being able to provide them in DP for planners to arrive at a good demand plan based on all sorts of information. What I may not be aware of at this point are possible difficulties and data consistency related aspects (e.g. measure consistency at various CVC levels) over a long term to make good sense of these numbers.

Expected Stock out - I still need to think of the right formula but it is what it means. If I plan for a final demand of d units in a period, based on some other key figures, what is the likelihood of demand being not being met. I can think of a value between 0 and 1. 0 could mean there is 100% certainity of meeting the sales demand. Of course there are assumptions

Expected Expiration risk: Over planning causing possible loss of sales due to expired or near to expiry products.

Post facto forecast error: After the fact error. Which I can then use as a reference to get a pseudo safety stock quantity in DP books.

CoV- between Final Demand and Actual sales.

Planned Safety factor: !

Moving Average sales: 3 months, 6 months, ratios etc

Feel free to add more.

Thanks

Guru

[Former Member · Accepted solution]

GK,
You have described quite a potpourri of concepts.  I won't go into each of them.  I don't think there is enough clarity of scope to presume to give any meaningful answer.  From the nature of your question, I am going to assume that you are not a consultant, but are a user of some sort, and you are thinking about the scope of a new implementation.

The title of this post is "Top 10 DP Macros", but then you do not talk much about Macros. If I had to define 10 ten Macros, nothing on your list would even remotely be on my list, they are typically much more mundane. Macros are logical bits of code that will produce specific results in a Planning book. The questions you ask are  mostly not about Macros, but about business processes.   

I have been involved in several DP implementations, and each one was substantially different.  In each case the business people needed different solutions.  The most common high level business processes in DP are importing and reviewing historical data, creating statistical forecasts, supporting collaboration, and creating demand plans suitable for further processing,  Demand planners are typically not tasked with 'reducing avg inventory'.  Of course, anything is possible in DP.  Including supply planning.  Remember, though, that just because something is possible does not necessarily make it desirable.  Nor cheap.

You mention maintaining KFs which support supply planning tasks. Implementing these features will carry a cost, both during implementation and during subsequent use.  I have seen  Planning Areas in which there were so many Key Figures (added as 'nice-to-have' features), that the Planning books became cumbersome to the extent that they were virtually unusable when fully loaded (e.g. opening a normal selection in a planner's view with 'Details All' and then having to wait 10 minutes for the execution of all the supporting standard macros to be completed).  My opinion is that you are better off to start with an extremely focused set of requirements, which you can quickly implement and get benefits from.  Instead of asking "what is possible", ask "exactly what will I need to satisfy some specific business requirements".  Then, present THIS list to the consultants, who will create your solution.  Remember, there are lots of existing tools in ERP and APO that are designed to support supply planning.  How much sense does it make for you to pay your consultants to recreate this functionality in DP?

Best Regards,
DB49

[Former Member · Accepted solution]

Thanks DB49,

Got the point. I should have titled this post as top10 key figures in a standard DP planning book of a CPG company.

The mundane and easy part of data extraction, transformation, building infocubes, planning areas and dataviews with basic input and output key figures upto agreeing on final demand key figure  has already been done half a decade ago by an imported consultant. But they are basic - a. b, c and d = c+e. I already gathered some new key figures from fellow smart users cum consultant community. I was seeking some more measures that probably are better reflection of what they call best practices in CPG firms (that the fraternity of supply chain churns out by tons) so that I can evaluate its suitability in our modest planning book and see if it makes sense to provision for it, if not directly but with some adjustments, post  which I will get into discovering possible readily usable macros for new key figures that could be as simple as A in period n=2B in period n+5 or calculating workdays in a period to derive another slightly more accurate key figure that might convey something more meaningful or use some statistical functions to derive some intermediate key figures or find a way to discover how much of the sales were due to promotions without creating a separate book for promotions.

For lack of time and patience to read scholarly papers on this topic, I chose to ask here assuming over the years experienced consultants would have created all sorts of key figures in planning books ot atleast witnessed and care to keep in mind. I thought I could filter a few that made sense.

Do I sound clueless ?

Guru

[Former Member · Accepted solution]

GK.
I would never characterize anyone as clueless.  We are all on a journey moving toward enlightenment.  We all take different paths, and each of us has made a different amount of progress along the chosen path.

Let me say right off I have never done a DP implementation for a snack food company.  I have done DP work where the business is to manufacture a suite of products, where the main process is buy/repackage/sell the FG product to a contract manufacturing marketplace that provides consumer goods.

My comments were intended to encourage you to work from the requirements first.  Projects that are implemented with fuzzy goals are expensive at best. I recently completed a project where the business managers kept asking for more features, and in the end the solution ended up being complex, arcane, and more importantly, there was inadequate benefit to ever pay off all the project costs. The consulting company made a ton of money and certain business managers in the client lost their jobs.

So, to your issue.  You want a BP list of KF.  I will comment on your proposed list.

1. Expected Stock out - I have never seen a demand planner who was responsible for monitoring such a thing.  I can't really envision a planning process where the demand plan would be altered based on this, but that is not to say that there are no companies doing this.  Every day I learn something new. Definitely not on the BP top 10.  This type of functionality is normally done in SNP, PP/DS, Alert Monitor, or directly in ERP.

2.  Expected expiration risk - This might be useful in making recommendations to management to create a promotion.  Again, same comments as item one, usually not the purview of DP.  Not on the BP top 10 list.

3 & 4 - Forecast error and Forecast Variance - these are common measurements.  These probably could squeak into the BP list somewhere, but they are usually handled in BW rather than DP..

5.  Planned Safety factor - That could mean anything.  I have never seen anything like this in DP.  Not on the top 10.

6.  Moving Average Sales - Not on the top 10, but I have seen MA KFs in DP books, used to support forecasting results analysis.  In general, though, most analysis of Moving average KF is usually done in BW, not DP.

Best Regards & Good Luck,
DB49