Newly Published Microsoft DDSN and DSR White Paper

Getting the Intelligence to Build Demand Driven Supply Networks

Introduction

Building an effective Demand-Driven Supply Network (DDSN) presents an ongoing challenge. Most companies remain in the early phases of developing this business capability. The necessary information on which strategies are based is very complex and can change quickly. Businesses must not only respond quickly to market requirements such as demand, supply variables, and seasonal trends, but also maintain a balance between high levels of customer service and manageable inventory levels.

This paper identifies the challenges of building a Demand-Driven Supply Network, explains how to use near-real-time data in an integrated Demand Signal Repository (DSR), and shares examples of current successes and ideal states.

The Challenges of Building a Demand-Driven Supply Network

A Demand-Driven Supply Network (DDSN) is designed to improve the responsiveness of a company’s value chain. Some of the challenges of building an effective DDSN include an improper understanding of consumer consumption, not enough IT resources, and outmoded business practices around the tracking and use of Point of Sale (POS) scan data. A primary objective is to use real-time POS consumption data to build a better DDSN.

Aligning Demand and Supply with Consumer-Driven Planning

Aligning demand and supply with Consumer-Driven Planning means using real-time consumption data to ascertain what is really happening in the marketplace, and creating an effective and accurate forecast and plan to more accurately manage demand and supply. Consumer-Driven Planning supports organizations in creating realistic and achievable sales targets, developing detailed market intelligence, managing promotions more effectively, and establishing optimal inventory levels for a maximum return on investment at stores and in distribution across the value chain. In other words, it enables a company to establish a clear and unified vision of current and future demand, so that it can develop an execution plan that aligns all supply and sales processes around that vision.

Consumer-Driven Planning can help companies:
- Eliminate Out-of-Stock (OOS) conditions.
- Reduce safety stocks and remainders.
- Decrease stock levels and inventory costs.
- Cut unnecessarily long lead times.
- Improve promotion effectiveness.
- Increase customer service.
- Drive down costs.

Good demand planning requires communication among stakeholders across the organization, particularly in the areas of marketing, sales, and supply chain management. Consumer-Driven Planning enables effective collaboration between key individuals and departments, and helps maintain the security of confidential information.

Building Business Efficiency with a Demand Signal Repository (DSR)

A Demand Signal Repository (DSR) is a powerful enterprise data warehouse that stores large volumes of external and internal data that has been harmonized to provide visibility up and down the supply network. It can also be used to feed line-of-business applications that support DDSNs. A DSR stores retailer data, third-party data, and internal data in order to drive demand-driven business insights across the value chain of stakeholders. The following outlines some examples of these enterprise data sources.

Retailer Data Sources
 Point of Sale (POS) Scan Data - EDI, AS2, Retail Link, Partners OnLine, Workbench, VendorPulse, etc.
 Store and DCs Inventories
 Planograms
 Store Clusters
 Retail Item Hierarchies
 Events

Internal Data Sources
 Sales
 Promotions
 Events
 Item Hierarchies and Attributes
 Store/Location Hierarchies
 Forecasts
 Shipments

Third-Party Data Sources
 Syndicated Data - Nielsen, IRI, NPD
 Weather Data
 Map/Spatial Data

A DSR is an important building block of an efficient DDSN for the following reasons:

 It is the central database for all demand data.
 It harmonizes external data with internal line-of-business data to support multidimensional analytics across the organization.
 It supports cross-functional reporting and analysis with integrated demand analytics embedded into critical spend areas such as trade promotion management.
 It can be used to support business monitoring and trigger alerts for impending business issues (for example, Retail Out of Stock).


An effective DSR is extremely useful in gathering data from disparate sources. A DSR provides item, location, and calendar harmonization for disparate data types—for example, POS data from stores, warehouse withdrawal data, and syndicated data. It is the source of retail-specific information for retail forecasts, store withdrawals, shipments, and planograms, providing demand insight data on what customers bought within a category, and who they bought it from.


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Conclusion

A Demand Signal Repository (DSR) –based Demand-Driven Supply Network (DDSN) can transform the way a company negotiates the demand and supply chain. Integrating good business strategy with effective technology can have a significant impact on a company’s financial performance.

Building a successful DDSN can help businesses:
 Increase business efficiency through the use of DSR data.
 Optimize demand and supply cycles.
 Deliver integrated analytics for use in decision making.
 Reduce operational complexity.

Authors
David Kane
Consumer Goods Industry Market Development Manager
Microsoft Corporation
David Rice
Consumer Goods Industry Technology Strategist
Microsoft Corporation

For the full report, go to http://download.microsoft.com/download/E/5/5/E554F0BC-41D5-4641-AF2D-4DD23A995BC3/GettingtheIntelligencetoBuildDemandDrivenSupplyNetworks.pdf