Power Tools 1993 October

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:::::::::::::::::::::::::::::::::::::::::::::::::::::::::: :: :: :: Demand Forecasting (DF 3000) & :: :: Distribution Resource Planning (DRP 3000) :: :: Field Training Manual :: :: :: :::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ~~~~~~~~ Overview ~~~~~~~~ DF/DRP 3000 provides you with an opportunity to offer customers a mainframe-class logistics solution with the operating and cost efficiency of the HP 3000! In fact, the HP 3000 is the only platform, other than the mainframe, on which D&B Software DF/DRP is available. D&B Software has been selling DF/DRP on the mainframe for the past 5 years, and has several hundred successful DF/DRP customers, most of which are Fortune 500 companies. These solutions, working together, have helped companies reduce inventory levels from 20-40%, while at the same time increasing customer service levels from 10-50%. Now that DF/DRP is available on the HP 3000, many of HP's current and prospective customers can take advantage of this opportunity to improve their logistics performance. DF/DRP not only interfaces to D&B's AMAPS MRP solution, but D&B Software is committed to providing interfaces to most of the MRP solutions on the market today. Therefore, the potential market for DF/DRP is not limited to customers already using D&B's MRP solution. This guide is a quick reference designed to answer many of the key questions about selling DF/DRP 3000. You may want to print it out as it is fairly lengthy. If you have any questions about DF/DRP 3000, feel free to contact any of the people listed below. ~~~~~~~~~~~~ Key Contacts ~~~~~~~~~~~~ D&B Software: Fred Brown; 404-239-2486 Hewlett-Packard: Lynn Sauder, D&B Software Account Manager; 404-246-5230 ~~~~~~~~~~~~~~~~~~~~~~~~~ Dun & Bradstreet Software ~~~~~~~~~~~~~~~~~~~~~~~~~ Dun & Bradstreet Software is a company of the Dun & Bradstreet Corporation. Dun & Bradstreet, with revenues of more than $4.3 billion, has led the information services industry for nearly 150 years. Dun & Bradstreet Software was formed in 1990 by the merger of two software industry pioneers and acknowledged leaders - Management Science America, Inc. (MSA) and McCormack & Dodge Corporation (M&D). More than 5,000 manufacturing customers worldwide, including 75 percent of the Fortune 500, have chosen Dun & Bradstreet Software. Dun & Bradstreet Software has been a Hewlett-Packard Premier Solutions Partner since 1989. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ The Logistics Market Opportunity ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Logistics/distribution software is one of the fastest growing software markets. The reason is simple. Most manufacturing companies throughout the eighties have implemented MRP II systems and have concentrated on reducing their inventory levels within the four walls of their plants. Now, however, companies are broadening their focus outside the plant and working to manage the entire supply chain. With Total Supply Chain Management, companies link their marketing, sales, manufacturing, and distribution processes together for a more unified business approach to the market, their customers, and partners. As a result, companies can more effectively reduce operating costs, improve customer service, lower inventory investment and expand into new markets. ~~~~~~~~~~~~~~~~~~~~~~~~~~~ CSY Lead Generation Program ~~~~~~~~~~~~~~~~~~~~~~~~~~~ CSY is conducting an aggressive marketing campaign to inform our customers of this new logistics offering and generate leads. The program targets HP 3000 customers in manufacturing and distribution with sales of at least $100 million. A direct mail piece inviting customers to an audio conference on Supply Chain Management was mailed in January. The audio conference will be held in early February and will feature noted logistics expert, Dr. Donald Bowersox, as well as examples of the benefits that actual companies have achieved through DF/DRP. Leads from this program will be distributed to the HP Field in February. ~~~~~~~~~~~~~~~ DF/DRP Overview ~~~~~~~~~~~~~~~ Demand Forecasting and Distribution Resource Planning systems are sold as an integrated solution set or separately, as standalone modules. Demand Forecasting (DF/3000) --------------------------- The Demand Forecasting module enables customers to use both historical results and external variables to forecast future demand in an on-line, real-time manner. Improved management of new product forecasts enables organizations to link product marketing, manufacturing and/or purchasing more closely together. Thus, users can improve customer service, lower start-up product costs, and more quickly receive a higher return on investment in new products. Distribution Resource Planning (DRP/3000) ----------------------------------------- DRP is a time-phased inventory replenishment planning system for distribution of finished goods. This approach is analogous to MRP in manufacturing. DRP accepts input from sales forecasting, order processing, inventory control, master scheduling (if a manufacturer), and purchasing to compute a time-phased inventory replenishment plan that takes into account accepted inventory management rules and other parameters, such as lead times. DRP is applicable both for companies with a single distribution location and for those with multi-location distribution network. It provides visibility of time-phased replenishment requirements across all locations. If there is not enough inventory at the supply source locations, DRP computes a suggested fair share allocation to meet customer demand at each subordinate locations serviced by that source. In summary, DRP is a computational equation that calculates the most profitable balance between supply and demand for one or more distribution locations. DRP helps the entire distribution operation to perform more efficiently. Inventory levels can be decreased, while customer service and productivity increase. The overall improvement results in fewer schedule changes, lower operating costs, and higher profits. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Identifying DF/DRP Customers ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Target Customers ---------------- The customers with the most to gain from DF/DRP are manufacturers who distribute their own finished goods and wholesale distributors. In terms of size, D&B tends to focus DF/DRP sales efforts on customers with revenues above $75 million. However, a $50 million growth company is not out of the question. Some people believe that DF/DRP is only appropriate for companies with more than one distribution center. However, this is a misconception. DF/DRP is as important for a single site distribution center as it is for multiple distribution sites. The key thing to remember is that DRP helps manage finished goods inventory, regardless of how many distribution sites there are. As stated above, D&B Software is committed to providing interfaces to most MRP solutions. Therefore, potential customers are not limited to those using D&B Software's AMAPS solution. Key Decision Makers ------------------- It varies by customer, but the key decision makers tend to be managers who are responsible for the overall business results, including: - VP/Dir., Logistics - VP/Dir., Operations - VP/Dir., Manufacturing. In the case of Demand Forecasting, the VP or Director of Marketing/Sales will normally also get involved. DF Qualification Questions -------------------------- For DF/DRP 3000, the key area to focus on is whether customer service levels are deteriorating even though inventory levels are high. This is a common symptom companies develop when they don't have good control over their forecasting process and distribution channels. Companies with this problem are great candidates for both DF and DRP 3000. In addition, there are 5 questions that reps can use to determine whether customers are a good fit specifically for Demand Forecasting. 1) Is it difficult for you to smoothly introduce new product forecasts into the manufacturing and purchasing plans? This is an issue for the majority of businesses that must continually upgrade existing products or introduce new products in order to remain competitive. To support initial product roll-out, a forecast must be developed and passed to purchasing and/or manufacturing. DF improves the accuracy of a new product forecast by basing it on an alias product/group forecast. This ensures that a new product forecast will have a forecast demand pattern that is similar to the product/group being replaced or superseded. 2) Does your company have multiple groups involved in the forecasting and business planning process? Most organizations have multiple management groups involved in the business planning process so that each group can assess the effect of the plan on their departmental operation. For example, marketing/sales cannot effectively forecast a certain sales level without consulting distribution, manufacturing, and purchasing to determine whether there is enough capacity and buying power to meet the forecasted sales. There must be a consensus of the forecast by the different operating groups before the business plan is converted into strategic and tactical strategies and operations. DF supports multi-level, multi-group matrix forecasts, which can be reviewed to gain a consensus by the different operating groups. 3) Does your organization use stockpiling, promotional selling, and rescheduling to compensate for fluctuations in demand? When an organization does a poor job of forecasting, the above methods become reactionary techniques to respond to demand changes. With a good forecast, managers can improve sales and operations planning and take proactive measures to balance product inventory with customer demands. DF supports a rolling 12 month on-line forecast and a 24 month off-line (batch printed) forecast, which enables organizations to be proactive in their planning process. 4) Does your company have sales promotions that have a significant impact on your forecasts? Most consumer organizations have weekly, monthly, quarterly, and sometimes annual types of promotions. This external knowledge must be input to any statistical forecast as an adjustment. DF supports time specific forecast adjustments, so that promotional campaigns can be linked to manufacturing, distribution, and/or purchasing schedules throughout the forecasting process. DRP Qualification Questions --------------------------- 1) How many stock keeping units (SKUs) does your company have, and is inventory management of these SKUs a time-consuming task? For companies with over 30,000 SKUs, it is a monumental task for inventory planners/managers to review each product/SKU. DRP supports 14 different action/management decision guides, which allow the system to flag, on an exception basis only, those SKUs that require prompt action. This enables users to proactively focus on specific products that require attention. In addition, it helps organizations to support expansion of products without significant increases in personnel. 2) Is your finished goods replenishment scheduling out of sync with your demands? Companies answering yes to these questions will find that DRP 3000 can make finished goods inventory management a whole lot easier and help improve customer service. ~~~~~~~~~~~~~~~~~~~~~~~ Beating the Competition ~~~~~~~~~~~~~~~~~~~~~~~ AMERICAN SOFTWARE ----------------- The primary competitor for D&B's DF/DRP is American Software, running on the mainframe and the AS/400. While American Software has a large share of the logistics/distribution market, they do not appear to have strong customer loyalty. In fact, only about 10% of their customers have remained on maintenance contracts. D&B's DF/DRP solution has 4 key advantages. 1. DF/DRP uses a balance of batch and on-line, real-time processing. American Software's solution actually has 3 different systems interfaced through batch processes. Therefore, with American Software, only data entry can be done real-time. Even the simplest analysis must be executed in batch mode. 2. DF/DRP has been tuned for the HP 3000, running in native- mode on MPE-iX, so it truly takes advantage of the HP 3000's superior OLTP performance. The performance of American Software's AS/400 version is poor because when they ported to the AS/400, they simply recompiled the COBOL of the mainframe version. 3. D&B's DF/DRP 3000 has all the functionality of DF/DRP on the mainframe. American Software's AS/400 version lacks some of the mainframe version's functionality because of performance limitations of the AS/400. 4. D&B has proven expertise available for consulting and implementation services to make sure our customers are successful. Having worked with companies like Whirlpool and Armstrong World Industries, D&B's logistics consulting services group is one of the most experienced professional services organizations in the world. MANUGISTICS ----------- Manugistics, formerly called STSC, offers a DF and DRP solution running on the IBM mainframe and DEC VAX. A C-based version of Manugistics' application is also being ported to the HP 9000 and HP 3000. Manugistics' solution has the following strengths: - Total real-time capability - GUI front-end - Multiple forecast periods - Fully integrated SOP solution However, D&B has been successful selling against Manugistics because of the following advantages: 1. DF/DRP is written in Cobol, which is what 90% of business data processing shops use. Manugistics is written in APL. 2. DF/DRP uses a balance of batch and on-line resources to optimize data processing resources. Manugistics' 100% real-time environment places a burden on data processing resources because even compute-intensive analyses, such as mass demand adjustments, are executed in on-line mode. 3. DF/DRP can store aggregate forecasts. Manugistics solution has no mechanism to store multiple level aggregate forecasts, so it is difficult to compare actual results to the forecast. Competitive Analysis: Andersen Consulting ------------------------------------------ AC's product is called DCS, and it is based on AC's case environment, Foundation. The primary disadvantage of DCS is that it doesn't include demand forecasting functionality. This should not be a difficult solution to beat with DF/DRP. ~~~~~~~~~~~~~~~~~~~~~~~~ Current DF/DRP Customers ~~~~~~~~~~~~~~~~~~~~~~~~ D&B Software's mainframe DF/DRP solution is installed at over 200 customer sites including: - Armstrong - Coca Cola - Whirlpool In addition, although the HP 3000 product is being released in Feb/March, D&B has already sold DF/DRP/3000 to Du Pont, and sales are pending to several other large customers!