Kingpin: Fast. Factual. Full-picture FMCG Forecasting
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Final project for DSC4215 Supply Chain Visualization & Actionable Intelligence (taught by Assoc Prof Keith Carter of National University of Singapore). Data has been modified to obfuscate sensitive competitive information. Group members: Chen Yuying, Ginny Tan, Nelson Tan, Nguyen Thu Nga, Zhang Xuyang and Quek Keng Yong
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Kingpin: Fast. Factual. Full-picture FMCG Forecasting
- 1. Visualize actionable intelligence in consumer goods demand planning with Kingpin forecasting solutions Fast. Factual. Full-picture. Feel like the kingpin of your supply chain. Interactive visualization versus spreadsheet planning The following is a case study on how Kingpin solutions helped Procter and Gamble (P&G) improve demand planning performance in the Philippines. Massive inventory costs due to inaccurate product line forecasts -$6,522,331 How Kingpin solutions yielded improvements for our client Challenges in consumer goods forecasting Even the most established FMCG firms contend with Management believes that siloed supply chains have missed global optimization opportunities Lack of actionable intelligence on problems across product lines, preventing rapid response. 20% Our Solution Kingpin solutions for FMCG demand planning can deliver data-driven optimization to your planning cycle, from analysis to customer relations to shipments. Fast: Get instant insights into issues that hold back your company’s profitability Factual: Real-time forecast generation and correction prevents loss of sales and high inventories Full-picture: Improve distributor engagement and free up executive time to do strategic planning Visible data. Tangible Results. forecast error Monitor an array of indicators: demand, inventory, forecasts *Source: 2014 3PL summit aimed to adopt a real- time instrumented supply chain* due to: 2% 5% 10% Sales increase* Margin improvement* Higher asset utilization* The value of supply chain integration *Source: 2014 3PL summit High forecast error from poor monitoring of product performance and distributor info 24.68% Lost sales due to insufficient inventory -$687,552 Drill down to specific SKU, find problems and respond fast Apply what-if analyses on costs and pricing to get best course of action $2,259,2434.2%Reduction of forecast error Net financial benefit Save millions each year for $600/day Get a free trial consultation by filling in your details on our website: tinyurl.com/kingpin4
- 3. DISTRIBUTORANALYSIS Distributor DistributorF DistributorB DistributorC DistributorE DistributorA DistributorD 0.0 0.2 0.4 MedianMAPE 44.61% 37.85% 29.24% 24.48% 20.08% 19.73%20.00% (1)MostDistributorssufferfrom poorforecastingaccuracyexceptDistributorD MedianMAPEofDistributors;thosethathaveforecasterrorof20%andaboveisconsideredpoor 0K 1K 2K 3K 4K 5K 6K MedianActualShipments 0.0 0.1 0.2 0.3 0.4 MedianMAPE DistributorF DistributorB DistributorA DistributorD MAPE>20% Average Distributorswithhigh forecastingerrorbutLow MedianActualShipments Distributorswithlow forecastingerrorbutHigh MedianActualShipments (2)DistributorsB&FareofPrimaryConcern,DistributorA &BareofSecondaryConcern ForecastingPerformancebyDistributorsMedianForecastError(MAPE)against Medianshipmentvolume2015 0.5 0.6 0.7 0.8 0.9 1.0 1.1 MedianSP2 0.6 0.8 1.0 MedianSP1 DistributorB DistributorF 0.9000 1.1000 0.9000 1.1000 Performance:The closerto1,thebetter theperformance (3)DistributorB&Fhaspoorerforecaststhantheothers Shipmentperformance1(SP1)againstShipmentperformance2(SP2)in2015 Whatproductsshouldwetakenoteof?
- 4. PRODUCTANALYSIS ShavePrep OralCare Razors HairCare Respiratory Care Personal Cleansing SkinCare Blades AirCare Fabric Enhancers Diapers Laundry Feminine Care DishCare 0.0 0.1 0.2 0.3 0.4 MedianMAPE MAPE>20% (1)ProductCategoryAnalysis:8/14Catergorieshavepoorforecastingperformance MedianMAPEagainstCategory2015 0 10 20 30 40 50 60 70 80 MedianProfitw/oInvCostperUnit 0.00 0.05 0.10 0.15 0.20 0.25 MedianMAPE ShavePrep OralCare Average MAPE>20% HighForecastError, HighMedianProfit (2)ProductShortages:MonitorOralCareandShavePrep MedianForecastErroragainstMedianProfit2015 0.0 0.5 1.0 1.5 2.0 2.5 3.0 MedianInventoryCost/Unit 0.0 0.1 0.2 0.3 0.4 0.5 0.6 MedianMAPE Blades Diapers Razors Average MAPE>20% HighForecastError,High InventoryCosts (3)ProductsinExcess:MonitorRazor,BladesandDiapers MedianForecastErroragainstMedianInventorycost2015 Howdowemakeabetterdecision?
- 5. Distributor DistributorA Brand Multiplevalues Usethefiltershere: January2015 March2015 May2015 July2015 September2015 November2015 January2016 20K 30K 40K 50K 60K Value LowerQuartileMedianUpperQuartile (1)DecisionChartOriginalandRecommendedForecastsaredisplayedwithinventorylevels(withtherangeinblue-green)fortheUserto makethefinaldecision MeasureNames RecommendedForecast ActualShipments OriginalForecast Category Segment Brand RecommendedForecast OriginalForecast Laundry LaundryDetergent Bonux Respiratory Care Decongestant Vicks SoreThroatRemedyVicks 2,179,5441,643,806 211,085163,385 21,58114,963 (2)TableofForecastfortheNextTimePeriod OriginalForecastusestheoriginalforecastingmethod,RecommendedForecastusestherecommendedforecastingmethod OPERATIONALDASHBOARD
- 6. 24.68% ForecastErrorforOriginal Forecast MAPEin2015 GoalofForecastErrorfor 2016 MAPE 20% RecommendedForecastMethod Newmethodconsiderskeyvariablesforprediction RecommendedForecast=1.10(PreviousmonthDistributorSalesdata) -0.07(PreviousmonthDistributorInventorydifference) -0.03(OriginalForecast) VS FORECASTANALYSIS January March May July September November MonthofDate[2015] 0K 200K 400K 600K 800K Error(Reg) Average RecommendedForecastMethod:Erroronaverageismuchlower andismuchmorestableacrossthemonths Error=RecommendedForecast-ActualShipments January March May July September November MonthofDate[2015] 0K 200K 400K 600K 800K Error Average OriginalForecastMethod:Erroronaverageisveryhighand fluctuateswildlyacrossthemonths Error=OriginalForecast-ActualShipments
- 7. FORECASTPERFORMANCEEVALUATION OriginalForecast RecommendedForecast 24.68% ForecastError(MAPE)in2015 MeanAveragePercentageError 20.52% ForecastError(MAPE) UnderRecommendedForecast $6,522,331 InventoryCost(2015) FromExcessStock $687,552 LostSales(2015) FromInsufficientStock $4,244,936 InventoryCosts(2015) UnderRecommendedForecast $705,703 LostSales(2015) UnderRecommendedForecast $2,259,243 TotalCostsavingsifRecommendedForecastisused NetgainsonInventoryCostsandLostsales January February March April May June July August September October November December 35K 40K 45K Value Avg.OriginalForecast Avg.ActualShipments Avg.Predicted OriginalForecastconsistentlyover-forecastbyhighamountswhereastheRecommendedForecastfollowstheActualShipments morecloselyOriginal,RecommendedForecastsandActualShipmentsin2015
- 8. DRILLDOWNDASHBOARD Category Segment 0M 1M 2M 3M 4M 5M 6M 7M 8M 9M 10M 11M ActualShipments AirCare AirFreshener Blades BladeDoubleEdge MaleSystems-Blades Diapers Diapers DishCare HandDishwashing FabricEnhancers FabricEnhancers FeminineCare Liners Pads HairCare HairConditioners Shampoo Laundry LaundryDetergent OralCare BatteryToothbrushHandle (1)InventorylevelsofeachProductSegments BarshighlightedinRedhasMAPE=<20%andgreenmeansMAPE>20%;BarsrepresenttheActualShipmentsandthe BlackBarrepresentstheOriginalforecast Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0 100 200 300 Avg.ActualShipments 0 100 200 300 Avg.OriginalForecast (2)ActualForecastPerformanceoftheProductin2015 BandshowstheForecastRangeandpointsrevealtheActualShipments-ifbluepointsfallwithinrange,itsuggeststhat forecastisstilltolerable.Ifitfallsoutoftherange,theforecastisunacceptable SKUs All Segment All Category Blades Usethebelowfiltersto Drilldown: Brand Fusion
- 9. Country Segment Avg.ProfitMargins/Unit (AdjustedbyFilter) Avg.ProfitMargin/Unit (Original) Avg.InventoryCost/Unit (AdjustedbyFilter) Avg.InventoryCost/Unit (Original) Philippines AirFreshener Bar BatteryToothbrush.. BladeDoubleEdge Decongestant DentalFloss Diapers FabricEnhancers 0.9 2.4 0.8 1.0 2.3 0.9 0.8 0.7 1.1 2.9 1.0 1.2 2.8 1.1 0.9 0.9 6.1 2.2 8.6 19.3 76.2 10.2 7.0 6.6 21.2 7.8 30.1 67.5 266.8 35.5 24.6 23.2 (2)TableofProfitMarginsforeachProductSegment $18,217,344 TotalCost UsingOriginalForecast $1,071,173 LostSales UsingOriginalForecast $1,102,446 LostSales UnderRecommendedForecast $5,093,924 InventoryCosts UnderRecommendedForecast $7,826,797 InventoryCosts UsingOriginalForecast %changeofInventoryCosts 0.2 %changeofPrices 0.4 %changeofProductCosts -0.6 (1)VariablestoadjustforWhat-If: WHATIFANALYSIS OriginalForecast RecommendedForecast $6,999,193 TotalCost UnderRecommendedForecast