Demand Planning Alerts Increase the Accuracy of Your Forecasts

  • by David Ducray
  • November 1, 2003
One of the biggest problems facing demand planners is spotting trends and errors in large volumes of data. You can use the alert functionality in SAP APO Demand Planning module to spot discrepancies, allowing your demand planners to "manage by exception." We explain the different ways in which you can use alerts to help create a more accurate demand forecast.

Demand planners are often faced with the task of converting large amounts of data into an accurate forecast. This becomes more difficult the shorter the planning horizon. The planner has to react quickly and often under intense pressure to understand a vast array of data and to identify trends and errors.

You might have implemented the Demand Planning (DP) module of SAP's Advanced Planner and Optimizer (APO) application to help you with this task. DP offers “consensus-based,” Internet-enabled forecasting tools such as Collaborative Demand Planning and Promotional Planning, and interactive and statistical forecasting functionalities. These tools allow customers, demand planners, marketing and sales teams, and corporate decision-makers to interact and build an accurate demand plan in real time.

Information overload is still a potential problem, but APO provides help here in the form of alerts. Alerts enable management by exception, and they have many guises in the APO modules. As an exception-based management tool within DP, an alert is an effective way of providing the input used to modify both historical sales data and future forecasts. Whether the aim is to smooth and negate the impact of outliers, correct the impact of seasonal trends, account for the effect of promotions, or include the influence of product life-cycle changes, alerts provide early warning signals that some action is necessary.

I'll explain the different types of alerts and show you how you can use them as a forecasting aid. First, let me show you how alerts work within APO.

David Ducray

David Ducray has a bachelor of commerce degree, majoring in economics and business administration. He is also CPIM- and SAPcertified. As the manufacturing information technology director for a high-tech electronics manufacturing organization, David was responsible for re-engineering forecast-to-stock, replenishment-to-procurement, and order-to-cash strategies, as well as implementing these systems. He has spent the past two and a half years consulting for a leading consumer products organization in the fields of order-to-cash and forecast-to-stock and implementing SAP R/3 in these fields in 19 countries. Prior to this engagement, David spent more than three years consulting for a leading electronic components and systems.

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