To document the various ways the Procurement Team and Logistics Team create forecasts.
- PERSONS AFFECTED / RESPONSIBILITIES
- Buyer/Associate Buyer – Creates new item volume and booking forecasts.
- Logistics Team Leader – Creates 1st production run forecasts, promotion forecasts and item transition forecasts.
- Logistics Analyst – Creates 1st production run forecasts and communicates forecasts to the buyer.
- Vendors – Requests forecast or booking and receives forecast or booking.
Majority of forecasts are requested by a vendor, so they may not be needed for all projects or programs.
Direct to Store (DTS) items will follow the same process as outlined below, except instead of communicating with the DC Buyers, communication is sent to the Regional Buyers.
There are various types of forecasts a vendor might request. Below is a summary of the forecast types as well as an outline of the thought process being used for each forecast type.
4.1 New Item Annual Volume Forecasts
4.1.1 These are determined by the buyer and are included on the Request for Proposal (RFP) Bid Sheet that is sent to vendors during a RFP or when developing an item with a vendor. Always quote movement amounts in units.
126.96.36.199 The RFP Bid Sheet is located on the P Drive.
4.1.2 These amounts are necessary for vendors to accurately determine their costing for an item. CaseStack and AmeriCold also use new item forecasts when quoting their distribution costs to a vendor.
4.1.3 By using MicroStrategy or Family Data Cubes, there are a few methodologies to use when determining a New Item Annual Forecast.
188.8.131.52 Use a similar private label item’s unit movement.
184.108.40.206 Use a similar branded item’s unit movement.
220.127.116.11 Use a category’s/subcategory’s average unit movement.
18.104.22.168 Always base forecasts off total sales, not ident sales.
22.214.171.124 Always apply the current sales trend to the forecasted amounts.
4.1.4 Always be conservative with the New Item Annual Forecasts. Over forecasting can cause multiple issues with extra raw materials, excess packaging, etc. It’s preferred to chase the business then to have to figure out a solution to move through excess inventory.
4.2 Annual Volume Forecasts
4.2.1 Vendors may request an annual volume forecast for production planning purposes or for booking purposes. These forecasts are completed by the buyer.
126.96.36.199 Bookings can be needed for commodity item’s raw materials or for the currency exchange for an imported program, primarily the euro.
4.2..1.2 Bookings are fixed amounts that a vendor secures at a specific price for a specific time frame. Most bookings are renegotiated annually, but some bookings may be able to exceed a year if it’s determine this would be a favorable situation. The buyer would negotiate this at the time of confirming the booking amounts.
188.8.131.52 Bookings are usually requested around the specific harvest time or planting period for the commodity, i.e. olive oil in December, aluminium foil in October, pasta in June.
4.2.2 The below template can be used for annual forecasting purposes. Instructions are included on the 1st tab of the workbook.
184.108.40.206 The Forecasting Template is located on the P Drive.
220.127.116.11 Use the below pre-populated MicroStrategy Buyer – Forecast Report for this template.
18.104.22.168 Each buyer should save all annual volume forecasts into the below folder on the P Drive. The folders should be set-up by category.
4.3 1st Production Run Forecasts for New, Everyday Items
4.3.1 1st production run forecasts give vendors guidance on the specific amount of product to produce for their 1st production run. Specific case quantities enable the vendor to secure raw materials, packaging and production line time.
22.214.171.124 1st Production Run Forecasts are needed for most projects with very few exceptions .
126.96.36.199 Logistics Analyst emails buyer to confirm if a forecast is needed for a project. The buyer emails the vendor to confirm if they would like a forecast. The buyer informs the Logistics Team Leader and the Logistics Analyst of the vendor’s response and the Logistics Analyst adds notes in OneNote.
4.3.2 If a forecast is needed, the Logistics Team needs the following information:
188.8.131.52 For the buyer to provide: annual volume projection (always in units), minimum production run amount and frequency of production runs.
184.108.40.206 From the Bid Sheet: ti/hi, case pack, supply chain process, shelf life, order minimum and lead time.
220.127.116.11 From the latest Seasonality Report on the EB SharePoint Site: seasonal movement of the category. (be brief: Christmas, Thanksgiving, Mother’s Day, Jul/Aug. If no Seasonality, put “Flat”)
18.104.22.168 This information is input on a form that the Logistics Analyst will email out at the beginning of a project.
22.214.171.124.1 Buyer fills out the field for “Warehouse Minimum/Lead Time”, the sections under “Item Information” and the sections under “Information to Assist in Forecasting”.
4.3.3 The Logistics Team reviews the DC’s, the number of stores each DC services and all of the above information to create the forecast.
126.96.36.199 The 1st production forecast for items is typically 12 weeks of inventory based upon projected unit sales.
188.8.131.52 When the item has a shorter shelf life, the 1st production forecast is typically a pipeline fill of one case per store, plus 2-3 cases of safety stock per store.
4.3.4 The Logistics Team forwards the forecast to the buyer for their review and approval.
4.3.5 The buyer sends the 1st production forecast to the vendor and cc’s the Logistics Team Leader and the Logistics Analyst.
4.3.6 If a forecast has been provided then all POs will be scripted. The Logistics Analyst will do the following after Buyer send forecast to Vendor.
184.108.40.206 Will post the forecast in Prodika under the Draft section of S3-S4 PO’s and Shipping activity.
220.127.116.11 Will send the forecast to Warehouse Buyers when POs are requested.
4.4 Promotional Forecasts
4.4.1 Promotional Forecasts are for national programs initiated by the Global Office to give vendors notice of the amount of product to have available to ship to support the promotion. Promotions are communicated 3 months in advance of the promotion.
18.104.22.168 The promotions could be: Whole Deal feature or coupon (in store flyer), Global Team’s suggested items for off shelf displays or pallet drops and for the Exclusive Brands demos (these occur every fiscal period).
4.4.2 Communication of a promotion is sent to vendors by the Logistics Team Leader and the buyer is cc’d.
4.4.3 If a vendor requests a forecast, the following information is taken into consideration: minimum production run, frequency of production runs, ti/hi, case pack, supply chain process, shelf life, order minimum, lead time, seasonal movement of the item, if there’s a discounted retail price or coupon offered and historical movement/lift from past promotions.
4.4.4 The Logistics Team Leader reviews the DC’s, the number of stores each DC services and all of the above information to create the forecast.
4.4.5 The Logistics Team Leader sends the forecast to the vendor and cc’s the buyer.
4.5 Item Transition Forecasts
4.5.1 When an item is transitioning to a new vendor or is being replaced by another item, the vendor needs guidance on the final production run amount to produce of the current item.
4.5.2 The buyer determines the launch/reset month for the replacement item. This will dictate the timing of the final production run of the current item.
22.214.171.124 Reference the Timeline for a New Project P&P for additional information on how to determine the launch/reset date.
4.5.3 The buyer meets with the Logistics Team Leader to determine if a forecast will be completed for the vendor or if the DC buyers will be asked to place POs for the vendor to coordinate their final production run against.
126.96.36.199 For vendors in consolidation, a forecast is usually created for them.
188.8.131.52 For vendors that ship direct to the DCs, the DC buyers are usually asked to place their own POs.
4.5.4 If a forecast is needed the Logistics Team Leader will create a forecast by taking the following information into consideration: 1st production date/1st ship date/launch month of new item as well as the following information for the current item: minimum production run, frequency of production runs, ti/hi, case pack, supply chain process, shelf life, order minimum, lead time, seasonal movement, sales history, inventory amounts in the DCs and the inventory amount at the vendor’s production facility.
4.5.5 The Logistics Team Leader reviews the DC’s, the number of stores each DC services and all of the above information to create the forecast.
4.5.6 The Logistics Team Leader forwards the forecast to the buyer for their review and approval.
4.5.7 The buyer sends the forecast to the vendor and cc’s the Logistics Team Leader and the Logistics Analyst.
4.5.8 If POs need to be placed directly with the vendor, the buyer will communicate this to the DC buyers via the weekly EB Buyers Update.
184.108.40.206 The DC buyers should be given at least 2 weeks to place last POs.
220.127.116.11 DC buyers should not be expected to order more than 12 weeks supply (on-hand plus on-order).
18.104.22.168 For an item with a shorter shelf life, the amount ordered will be modified to ensure that short coded product isn’t shipped to the DCs and ultimately to the stores. The DC buyers might stagger their last POs over a period of time to ensure they are continuously receiving fresh product.
22.214.171.124 The last PO place by date is determined by the time gap between the launch date of new item and the discontinuation of the current item, the weeks of supply of inventory of the old item in the DCs and the current program lead time.
4.5.9 If a current vendor has a large amount of finished goods on hand and it has been agreed upon that we will order all the finished goods, an allocation will be created by the Logistics Team.
126.96.36.199 Allocation amounts are calculated so that all DCs have similar amounts of inventory/weeks on-hand and on-order. Ideally all DCs should run out of stock of the current item inventory right when the new item delivers to the DC.
188.8.131.52 If the weeks of supply of inventory are imbalanced or last POs cause an imbalance, the Logistics Team calculates an allocation to balance out the week’s on-hand for all DCs.
184.108.40.206 The Logistics Analyst sends out the allocation to the DC buyers and asks them to place POs. These POs bridge the DC’s inventory the old item until the new item arrives.