Step1: New Product planning process
Planning process for new product launch forms the first step of the larger S&OP process. This sub process shall support forecasting demand for the new product being launched. Statistical Quantitative forecast most of the times is based on the fact that future demand will resemble the historical sales. For improved forecast accuracy, qualitative information shall be incorporated into quantitative forecast numbers and a combination of it shall be used as Baseline forecast.
But for a new product with no historical sales data present, one needs to look at their product list for items with similar attributes and characteristics. Once identified historical sales of these existing product shall be mapped as history of the new product. Later a quantitative forecast can be generated out for this new product.
Picture: Product Launch Flow *** A new product launch can affect the sales of existing products under same product line. Say the recent launch of Apple's "3G S Iphone" will surely impact the sales of it's existing old 3G model. (Well in this particular example with Apple reducing the price of old 8 GB model by half might shadow down the effect to some extent). But usually in such cases old product faces lower demand with consumers trying to grab the latest model release. This effect of reduction in the sales volume, sales revenue, or market share of one product as a result of the introduction of a new product by the same produce, is referred as Cannibalization.
Another commonly seen effect is phase out of an existing product, which is getting replaced by a new one. Effect of this process should be incorporated into the baseline forecast calculation.
Setting up New Product Planning process in Demantra:
Oracle Demantra and it's integration with EBS provides the features required to build the new product planning process on it. Collect new product codes from EBS into Demantra by using NPI setup form on DM system administrator responsibility. Once the new product is visible in Demantra, use the Member Management feature under Demand planner application to create combinations where this new product shall be sold. zero history can also be created for this new product and selected location level member's combination. This will allow users to pull up these combinations into worksheet and manually enter or adjust the historical sales information. Next step in the process is to map the historical sales from existing combination to new combination, which can be achieved using Chaining Management feature. A Chain is created and executed to copy sales history from existing combinations into the new combination. Once done, the new product at selected locations will have historical sales data, which is utilized by the Analytical Engine for calculating future demand of this new product.
It can be ensured that new product's demand prediction follows the shape of previous product launches, using Shape modeling feature of Demantra. As many as 8 distinct shapes can be saved and used under this functionality.
...........................next step in S&OP process "Demand Planning/Review".............................................
*** picture reference: http://www.winningware.com/images/LaunchFlow.jpg
