APICS - CPIM - MPR

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Business plan

A statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow (source and application of funds) statement. A business plan is usually stated in terms of dollars and grouped by product family. The business plan is then translated into synchronized tactical functional plans through the production planning process (or the sales and operations planning process). Although frequently stated in different terms (dollars versus units), these tactical plans should agree with each other and with the business plan. See: long-term planning, strategic plan. 2) A document consisting of the business details (organization, strategy, and financing tactics) prepared by an entrepreneur to plan for a new business. 1) A statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow (source and application of funds) statement. A business plan is usually stated in terms of dollars and grouped by product family. The business plan is then translated into synchronized tactical functional plans through the production planning process (or the sales and operations planning process). Although frequently stated in different terms (dollars versus units), these tactical plans should agree with each other and with the business plan. See: long-term planning, strategic plan. 2) A document consisting of the business details (organization, strategy, and financing tactics) prepared by an entrepreneur to plan for a new business. A type of forecasting that uses cause-and-effect associations to predict and explain relationships between the independent and dependent variables 1) A collaboration process whereby supply chain trading partners can jointly plan key supply chain activities from production and delivery of raw materials to production and delivery of final products to end customers. Collaboration encompasses business planning, sales forecasting, and all operations required to replenish raw materials and finished goods. 2) A process philosophy for facilitating collaborative communications. CPFR is considered a standard, endorsed by the Voluntary Interindustry Commerce Standards. Syn: collaborative planning. A marketing philosophy based on putting the customer first. The collection and analysis of information designed for sales and marketing decision support (as contrasted to enterprise resources planning information) to understand and support existing and potential customer needs. It includes account management, catalog and order entry, payment processing, credits and adjustments, and other functions. Syn: customer relations management. A method of forecasting where time series data are separated into up to three components: trend, seasonal, and cyclical; where trend includes the general horizontal upward or downward movement over time; seasonal includes a recurring demand pattern such as day of the week, weekly, monthly, or quarterly; and cyclical includes any repeating, nonseasonal pattern. A fourth component is random, that is, data with no pattern. The new forecast is made by projecting the patterns individually determined and then combining them. See: cyclical component, random component, seasonal component, trend component. The locations in the product structure or distribution network where inventory is placed to create independence between processes or entities. Selection of decoupling points is a strategic decision that determines customer lead times and inventory investment. See: control points. 1) The function of recognizing all demands for goods and services to support the market place. It involves prioritizing demand when supply is lacking. Proper demand management facilitates the planning and use of resources for profitable business results. 2) In marketing, the process of planning, executing, controlling, and monitoring the design, pricing, promotion, and distribution of products and services to bring about transactions that meet organizational and individual needs. Syn: marketing management. The planning activities associated with transportation, warehousing, inventory levels, materials handling, order administration, site and location planning, industrial packaging, data processing, and communications networks to support distribution. 1) The function of determining the need to replenish inventory at branch warehouses. A time-phased order point approach is used where the planned orders at the branch warehouse level are "exploded" via MRP logic to become gross requirements on the supplying source. In the case of multilevel distribution networks, this explosion process can continue down through the various levels of regional warehouses (master warehouse, factory warehouse, etc.) and become input to the master production schedule. Demand on the supplying sources is recognized as dependent, and standard MRP logic applies. 2) More generally, replenishment inventory calculations, which may be based on other planning approaches such as period order quantities or "replace exactly what was used," rather than being limited to the time-phased order point approach.

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Business planning

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Casual forecast Collaborative, Planning, Forecasting, and Replenishment (CPFR) Customer Relationship Management Decomposition

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Decoupling Point Demand management

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Distribution planning Distribution requirements planning (DRP)

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Exponential smoothing forecast

A type of weighted moving average forecasting technique in which past observations are geometrically discounted according to their age. The heaviest weight is assigned to the most recent data. The smoothing is termed exponential because data points are weighted in accordance with an exponential function of their age. The technique makes use of a smoothing constant to apply to the difference between the most recent forecast and the critical sales data, thus avoiding the necessity of carrying historical sales data. The approach can be used for data that exhibit no trend or seasonal patterns. Higher order exponential smoothing models can be used for data with either (or both) trend and seasonality. A forecast method on a correlated leading indicator, such as estimating furniture sales based on housing starts. Extrinsic forecasts tend to be more useful for large aggregations, such as total company sales, than for individual product sales. Ant: intrinsic forecast method. See: quantitative forecasting technique. Data gathering and preparation --> Forecast generation --> Volume and mix reconciliation #1 --> Applying judgement --> Volume and mix reconciliation #2 --> Decision-making and authorization --> Volume and mix reconciliation #3 -> Documenting assumptions - poor levels of customer service - buildup of inventory from large-batch production - weakened competitive position A forecast based on internal factors, such as an average of past sales. Ant: extrinsic forecast. 1) People who are responsible for and capable of making the right decisions on what forecasting models to use in different situations 2) Access to data and knowing what data are relevant 3) Selection of software applications to support the forecasting requirements of companies that differ, for example, in terms of manufacturing environments, processes, variety of products, and volume The framework in which manufacturing strategy is developed and implemented. Elements of the manufacturing environment include external environmental forces, corporate strategy, business unit strategy, other functional strategies (marketing, engineering, finance, etc.), product selection, product/process design, product/process technology, and management competencies. Often refers to whether a company, plant, product, or service is make-tostock, make-to-order, or assemble-to-order. Syn: production environment. Individual end items, i.e. Master Scheduling

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Extrinsic forecasting Forecasting process Imbalances in supply and demand can cause Intrinsic forecasting Keys to successful forecasting

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Manufacturing environment

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Master production schedule (MPS) Master scheduling

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The process where the master schedule is generated and reviewed and adjustments made to the master production schedule to ensure consistency with the production plan. The master production schedule (the line on the grid) is the primary input to the material requirements plan. The sum of the master production schedules for the items within the product family must equal the production plan for that family. The proportion of individual products that make up the total production or sales volume. Changes in the product mix can mean drastic changes in the manufacturing requirements for certain types of labor and material. Product family data, i.e. S&OP Marketing and sales roll-up the forecast from SKU level to product family to business plan. Management makes desired adjustments and then forces-down a new forecast in the same ratio as it was rolled-up An approach to forecasting where historical demand data is used to project future demand. Extrinsic and intrinsic techniques are typically used. See: extrinsic forecasting method, intrinsic forecasting method. A statistical technique for determining the best mathematical expression describing the functional relationship between one response and one or more independent variables. See: least-squares method.

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Product mix Production plan Pyramid Forecasting Quantitative forecasting techniques Regression analysis

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Resource planning

Capacity planning conducted at the business plan level. The process of establishing, measuring, and adjusting limits or levels of long-range capacity. Resource planning is normally based on the production plan but may be driven by higher level plans beyond the time horizon for the production plan, e.g., the business plan. It addresses those resources that take long periods of time to acquire. Resource planning decisions always require top management approval. Syn: resource requirements planning. See: capacity planning, long-term planning. The process of converting the master production schedule into requirements for key resources, often including labor, machinery, warehouse space, suppliers' capabilities, and, in some cases, money. Comparison to available or demonstrated capacity is usually done for each key resource. This comparison assists the master scheduler in establishing a feasible master production schedule. Three approaches to performing RCCP are the bill of labor (resources, capacity) approach, the capacity planning using overall factors approach, and the resource profile approach. See: bill of resources, capacity planning, capacity planning using overall factors, product load profile, resource profile. - Consensus on the sales and operations plan - adequacy of resources for the production and distribution plan - consistency of the sales and operations plan and financial plan Expert opinion, pyramid, focus group, Delphi

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rough-cut capacity planning

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S&OP Forecast S&OP Qualitative Forecasting techniques S&OP Quantitative forecasting techniques Sales and Operations Planning ( S&OP)

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Time series forecasts, decomposition, regression analysis

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A process to develop tactical plans that provide management the ability to strategically direct its businesses to achieve competitive advantage on a continuous basis by integrating customer-focused marketing plans for new and existing products with the management of the supply chain. The process brings together all the plans for the business (sales, marketing, development, manufacturing, sourcing, and financial) into one integrated set of plans. It is performed at least once a month and is reviewed by management at an aggregate (product family) level. The process must reconcile all supply, demand, and new-product plans at both the detail and aggregate levels and tie to the business plan. It is the definitive statement of the company's plans for the near to intermediate term, covering a horizon sufficient to plan for resources and to support the annual business planning process. Executed properly, the sales and operation planning process links the strategic plans for the business with its execution and reviews performance measurements for continuous improvement. See: aggregate planning, production plan, production planning, sales plan, tactical planning. A number used to adjust data to seasonal demand. Syn: seasonal adjustment. See: base series. standard deviation of period demand CV = -------------------------------------------------average period demand if CV < 1 is considered low-variance, CV > 1 considered high-variance A moving average where the oldest data point is dropped and the newest data point is included in the calculation. All data points are assigned equal weights. See: moving average, weighted moving average. The plan for how to marshal and determine actions to support the mission, goals, and objectives of an organization. Generally includes an organization's explicit mission, goals, and objectives and the specific actions needed to achieve those goals and objectives. See: business plan, operational plan, strategic planning, strategy, tactical plan. Analysis of any variable classified by time in which the values of the variable are functions of the time periods. Time series analysis is used in forecasting. A time series consists of seasonal, cyclical, trend, and random components. See: cyclical component, random component, seasonal component, trend component. An averaging technique in which the data to be averaged are not uniformly weighted but are given values according to their importance. See: moving average, simple moving average.

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Seasonal index Selecting a forecasting model Simple moving average Strategic planning Time series analysis Weighted moving average

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