building a demand forecasting solution using ibm …veracitiz.com/building a demand forecasting...
TRANSCRIPT
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Building a Demand Forecasting Solution using IBM FOPM to improve Accuracy and Coverage
Financial & Operational Performance Management
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Agenda
- Introduction
- The Transformation project
- Demand Forecasting
- Challenges in the Status Quo
- Solution
- Benefits
- Way Forward
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About the pharma company – Introduction
- 2 Bn $ Indian Pharma company dealing in generic, branded and APIs
- Growing @ CAGR of 34% since last 5 years
- 6th largest and the fastest growing Top 10 company in the US (by prescriptions),
the only Asian company to achieve that distinction
- Operating in advanced markets such as USA, Europe, Japan, Australia as well
as emerging markets including India,the Philippines and South Africa to name a
few.
- One of the world's largest manufacturers of Tuberculosis drugs.
- Goal of becoming a 5 Bn $ company by 2018
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6th
largest generic globally (by market cap1)
3rd
largest Indian Pharma (by total sales2)
9th
largest generic company(by sales2)
About the company - Globally
#1in Anti-TB(globally)
8th
India Pharma Market Rank5
4th
largest South Africa generics6
Emerging Markets
5th
largest US(by prescriptions3)
9th
largest Japanese generics4
Advanced Markets
Sources:1 Bloomberg EQS, 31 Dec 20152 Based on FY15 sales3 IMS MAT Sep 15
4 IMS MAT Mar 155 IMS MAT Dec 156 IMS MAT Dec 15
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i. Increase Forecast Accuracy
Scope for improvement in forecasting accuracy
(increase by 12%)
ii. Wider SKU Coverage
Increase in coverage across SKUs
(increase by 380%)
iii. Concensus Forecasting
Inclusion of majority stakeholders
(increase by 1,900%)
iv. Ground-level Intelligence
Inclusion of Ground-level Intelligence input from
field sales-force on a single platform
$2 Billion (2015) $5 Billion (2018)
The Need for Business Analytics
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How it all started – The Transformation
- Keeping pace with the growth – Excel was not scaling up
- Acquisitions creating complexity
- Group CFO formed a core cross functional team
- The Planning Project
- Consulting study by third party and introduction of demand forecasting
- Demand forecasting Project
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The Planning Process
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Headquarters Mumbai India
Branches DMCC Dubai UAE , Gurgaon India
Management Incorporated in 2011
Employees50+ Consulting professionals have expertise in IBM Cognos TM1, Cognos
Express, Cognos BI and Cognos Planning.
Offerings Planning | Budgeting | Forecasting | Reporting | Consolidation
IndustriesFMCG, Manufacturing, Pharma, Retail, BPO, BFSI, Technology, Insurance,
Construction, Aviation and Telecom
Global Presence Middle East and APAC
Our Mission
To maximize the ROI for customers by delivering end-to-end technology
solutions with utmost quality and transparent communications, thereby
building long lasting partnership.
Our Differentiator We stand for honesty in business – Veracitiz
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Awards & Accreditations
Veracitiz at a Glance
-- 1st & only TM1 Gold Accredited Partner in South Asia-- IBM Business Analytics “Partner of the Year” – 2015 & 2016-- IBM Certified Consultants-- Tech agnostic Consultants with process-oriented approach-- Team of Masters of Computer Applications, Chartered Accountants, MBAs
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The Golden Circle
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Why?Understanding the Need to Introduce
Business Analytics
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12The Need for Business Analytics
The Company’s Indian Operations
Warehouses: 7
CFA’s: 32
Third Party Manufactures: 77
Loan License Manufactures: 22
Inlicense Vendors: 17
Own Plants: 3
Planning SKU’s: Approx 1400 +
Fragmented transportation sector
Taxation Structure
Stockist Universe: 3,875
(Active 2,200)
Total Field Force: 6,814
• Medical Rep: 5,349
• Area Manager: 1,088
• Regional Sales Manager: 304
• Sales Manager: 67
• National Sales Manager: 6
Business Divisions: 16
Invoices Per Month: 300,000
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Conference Calls
Reminder mails to contributors
Meetings
Best estimate for 200 SKUs
3m Historical Sales
Salience
13The Need for Business Analytics
Demand Forecasting v1.0
Demand Planner(spreadsheet-based collation)For 4 month forward forecast
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14The Need for Business Analytics
Limitations of v1.0
Human Dependency
Loss of sale /High Inventory cost
200 SKUs out of 1,300 Time-consuming process(2 weeks)
27% gap in forecast
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How?Blueprint for Process Re-engineering
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Blueprint for Re-engineering
Communication Application Forecasting Engine Data Warehouse
+ +
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Integrated supply chain management
Predictive forecasting
Eliminating ‘stock outs’
Direct integration increases the speed of what if predictive forecasting
Predictive models are done at the lowest-level of granularity per product, but results are shown
as aggregates by TM1 ie: bottom-up forecasting
SPSS + TM1 direct integration is a competitive differentiator
SPSS performs unique algorithm predictive models per product, channel, etc. as each product
behavior is different
Measure of accuracy
Operational external factors can be introduced
Results map directly into dimensional data of a TM1 cube
IBM FOPM Solution(IBM TM1 & IBM SPSS)
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Demand Forecasting v2.0
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SAP BW
Publish Statistical Forecast, on which Demand Planner performs outlier check to disseminate
Baseline Forecast for field user intelligence input.
Reports
Forecast data at CFA-level, SKU-wise week-wise,
published as a feed for SAP.
Every user, in ascending order of hierarchy (beginning with RSM) reviews the forecast for each role/region mapped to him, and makes changes to the same, if necessary.
60 months' historical data of Normal Sales &
Free Schemes, imported from SAP, at a Customer-SKU level.
SKU-Division and Customer-CFA-Region-Division latest
mapping imported from SAP.
Historical data with latest mappings as well as free schemes calendar as an
input for IBM Cognos SPSS statistical forecasting.
Statistical forecast predicted based on historical sales trend.
After field users enter inputs upto cut-off date, DPT will review the baseline and make
changes wherever requried in a top-down
Corporate & field budget data excel import into TM 1.
Final data at RSM-CFA level, disaggregated into weekly buckets on the basis of past 6
months moving avg. sales salience.
IBM FOPM Solution
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What?Benefits of the implementation
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Easy to use 6-step Forecast Control Center
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Thoughtfully Designed Contributor Application
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Additional Offline Connectivity
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Optimizing Turbointegrator Processes
IRF
Divisions
Region-CFA
Div-Reg-CFA
IRF
16 Combinations
560 Combinations
16,800 Combinations
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Optimizing Turbointegrator Processes
IRF
Divisions
Region-CFA
Div-Reg-CFATraditional
Improvement15 seconds
20 minutes
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Post-Implementation Benefits
Column1Prior to Implementation Post Implementation
Tool Legacy Excel Sheets Marriage of IBM Cognos TM1 & IBM SPSS Statistics
StakeholdersDPT, GPMs, DHs
(~15 persons)
DPT, GPMs, DHs, SMs, RSMs
(~300 persons)
Method of Collaboration Email, Meetings, Conference Calls etc. 1 Single web-based Application (Contributor)
Single Version of Plan No Yes
Forecast Generation Time ~2 weeks ~2 hours
SKUs forecasted ~200 ~1,300
Forecast-level National-level Lowest-level of granularity
Forecast-Accuracy ~72% ~85%
IBM FOPM Solution
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The Road Ahead
Manufacturing
Manpower
Demand Forecasting
Advanced Markets
Capex
Incentives
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Nishant Vyas
IBM Sales Leader
+91-98-19-397-779
Roscoe Lobo
Consultant – Veracitiz
+91-97-73134-504
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Thank You.Your Feedback is Important!
•Nishant Vyas
– +91-98-19-397-779
•Roscoe Lobo
– +91-97-73134-504
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