The primary driver for the forecast initiatives was to maximize the return on inventory investment. However, in 2006, FNC started to see diminishing returns on these activities. The cost was exceeding the benefits or the improvements were so small they didn’t create measurable improvements in service levels or inventory turns. At this time, FNC began to think in terms of demand management rather than forecasting. Demand management is a three legged stool consisting of removing non-value added activities, reducing demand variability, and increasing operational flexibility. Our approach was to segment demand planning activities by value and forecastability.

The general purpose of segmenting planning strategies is to mitigate risk. At Fujitsu, we segment the demand planning strategies so that we can apply the appropriate inventory management scheme to each part based on its value and variance characteristics. On average, we have realized a 30% reduction in inventory cost per product while maintaining or improving service levels. These improvements have also created additional savings for our customers in terms of inventory cost and improved service levels. These savings are extremely important in a commodity market where we need to compete on service and survive on thin margins.

Have you had any success with such strategies?  Your comments and questions are welcome.

Barry Chapman
Business Product Manager – Demand Management
Fujitsu Network Communications, Inc.

Hear Barry speak on demand planning segmentation strategies at IBF’s Business Planning & Forecasting: Best Practices Conference in Orlando Florida, November 4-6, 2013

Gustavo Guttierez

Sushil Srivastava

Do you have nightmares that your critical suppliers will make short or no notice revisions to your critical component supply orders? How would your company adapt if suppliers decided to switch to buying their components from low-cost, low-quality countries and delivered unreliable or faulty parts for your products? How would your delivery performance fare if one or more components were delayed by a month or even a week? These are just a few of the challenges that we’re facing at TTI Floor Care North America (the makers of Hoover and Dirt Devil), where a single delay from a key supplier could cause huge sales losses. This is a perfect example of how formally collaborating with your suppliers provides a valuable benefit.

Managing and collaborating with a global supplier network is not an easy task.  At TTI, short term and long term forecasts are generated from the supplier level down to the individual SKU level and shared with suppliers utilizing a real-time internet collaboration portal. TTI and its suppliers can monitor and respond to events in the procure-to-pay cycle, view and acknowledge purchase orders, submit change requests, create advance shipment notices, view receipts, inventory levels, invoices, and payments. This closed loop collaboration enables TTI and its suppliers to thrive, even in this challenging economy. This pursuit has improved the forecast-to-delivery-to-pay cycle tremendously.

We would enjoy hearing your stories of successful collaboration with suppliers and also the supply chain challenges you face.   We look forward to sharing insights from the entire TTI Floor North America journey with you at IBF’s Supply Chain Forecasting and Planning Conference in Phoenix, AZ.

Again, your comments, feedback and challenges are encouraged and welcome!

Gustavo Gutierrez
Director of Operations
TTI Floor Care North America

Sushil Srivastava
Associate Director
Fujitsu America Inc

See GUSTAVO GUTIERREZ and SUSHIL SRIVASTAVA Speak at The IBF’S:

$695 (USD) for Conference Only!

February 22-23, 2010
Phoenix, Arizona USA