The APO Analytical Demand Planning with Navigational Attributes Booster

ByPrimary Researcher

Executive Summary

  • In APO, demand planners are often unable to make a distinction between the products in terms of its importance to the Business, especially when there are too many SKUs.
  • We cover how our Booster improves this.

Introduction

Creative use of Navigational Attributes can help demand planners get more insights into the nature of demand and focus on improving the quality of forecast of products that matter the most for the firm quantities. 

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  • Standard SAP (starting SCM 7.2) offers a rather static notion of ABC/XYZ.
    Analysis of products. This only helps in post mortem.
  • Attributes like Volume – Value – Velocity – Variability – Margins are highly dynamic and need to be kept current for the planner to do the right forecast value add.

Often with many SKUs, planners, and other contributors to consensus lose sight of what products are most crucial for the business.

Examples of this include the following.

  • Which products contribute to 80% of the demand?
  • Which products exhibit a more stable demand?
  • How long has it been since the product was launched?
  • What is the typical inventory turns of the product?
  • What will be the lost sales impact of a particular SKU?
  • What will be the cost of forecast error in dollar terms?

Demand planners need to critically evaluate the history and forecast of the products from these perspectives.

The Issue(s) with Maintaining Needed Master Data (Navigational Attributes)

There are no standard data sources to maintain the following attributes of a Product. At best, this needs to be computed offline and maintained by a file upload.

  • Volume Share: High, Medium or Low
  • Value Share: High, Medium or Low
  • Variability: Stable Predictable, Erratic
  • Velocity: Fast Moving, Slow Moving
  • Margin: High Margin, Low Margin

Our Alternative to ABC/XYZ Analysis

Our Booster that computes the value of each of the parameters from data sources within APO or ECC. This includes Value Share, Volume Share, Velocity, Variability, Margin %, and updates the master data too.

Our Booster allows for a flexible definition of these variables based on your perception of e.g., what a high-value share means.