Oracle Demantra Demand Management

Oracle Demantra Demand Management enables you to sense, plan for, and proactively respond to demand by sharing
a one-number plan that aligns your organization across departments and users. Demand Management allows you to
model new products based on the lifecycle of existing products, or you can model new products or versions that
supersede existing products.

Oracle Demantra Demand Management is the main pillar of the Demantra line which also includes Real-Time Sales &
Operations Planning, Predictive Trade Planning, and Deductions and Settlement Management.

Oracle Demantra Demand Management integrates with both the Oracle Enterprise Business Suite (EBS) and the JD
Edwards EnterpriseOne to retrieve the most up-to-date customer, item and sales information, returning a forecast.

The Demantra Fundamentals UPK is a prerequisite to this UPK.

Upon completion of this module, you will be able to:

Use worksheets and the simulation engine to forecast.

Analyze forecast accuracy and set exception filtering.

Use configure-to-order worksheets to plan for product options based on the bill of materials.

Introduce new products based on existing products.

Use Member Management to define members and combinations.

Forecast for new product combinations using chaining and shaping.

FORECASTING:

1. The Demantra Analytical Engine is an advanced statistical engine capable of multidimensional forecasting
with mixed modeling techniques.

Within a Demantra Spectrum solution, the Analytical Engine runs in the background when scheduled by the
administrator, reading data from the database and generating forecast data. The forecaster uses a worksheet to view
the forecast and make adjustments, saving those changes to the database. The updated forecast is available to all
users with the appropriate authorization.

In particular, in the batch mode, the Analytical Engine:

Runs when scheduled by the administrator in the background or when system is offline.

Refreshes the entire forecast set.

Traverses the large forecast tree.

Calculates large number of combinations.

Writes data series to the database.

Performs post-run scan of data.

Start the Analytical Engine to run to run forecasts in bath mode. The Analytical Engine is a separate application in the
Demantra suite. It is started from either the Desktop or the Start menu.

2. With Demantra Demand Management, you can change a forecast and then simulate the effects of the change.

A forecast is driven by time series analysis. Historical information is divided into two parts:
 Historical demand.

Causal factors used to explain historical demand.

Notes can be attached to the combinations you change for tracking purposes. The worksheet table displays note
symbols on those dates. Notes appear in two different areas: Notes dialog or the Notes/Attachments sub tab.

In this topic, you will make some changes to the Demo Worksheet forecast and use notes to document the changes.

3. You can perform "what if" simulation of the effects of changes on a forecast. After the simulation has been
run, you can either accept or reject the simulation results.

The simulation mode is similar to a batch run in terms of steps. The differences between simulation mode and the
batch run are:

Runs only on a designated subset of combinations.

Runs on a much smaller section of the Forecast Tree.

Faster than batch run.

Used for what-if analysis.

Useful for quickly evaluating changes in history, causal factors or promotions.

Simulation mode is launched by users on an as-needed basis.

Results can be accepted or rejected.

4. After a simulation has been run, you can either accept or reject the simulation results until you are satisfied
with your forecast. Worksheets can be formally approved and locked by management once agreement has been
reached. Demantra workflows can notify the administrator when a forecast has been approved and is ready for upload
to the ERP system.

5. Worksheets and attachments can be sent to your colleagues for further review and feedback directly from an
open worksheet. Alternatively, you can send and receive tasks from your colleagues in the Collaborator Workbench
in the My Tasks content pane.

HANDLING EXCEPTION:

1. Batch/simulation engines generate forecasts either manually or on a predefined schedule. When forecasts are
rerun, the older forecasts are kept so that they can be analyzed for accuracy. The number of saved forecasts is set by
the Demantra administrator. For example, the most current forecast is Fore_0. The last forecast is saved as Fore_1.
The older forecasts are available for review from a lag forecast series.

Demantra calculates a wide variety of key performance indicators (KPIs) that highlight the true effectiveness and
efficiency of your planning process and its results. These KPIs include statistical measures of forecast accuracy such
as:

Mean absolute deviation (MAD).

Mean and absolute percentage error (MAPE).

Weighted MAPE.

For each lag forecast, accuracy metric series can be created such as:
 # week lag absolute deviation

# week lag absolute error

# week lag percent error

Worksheets with predefined forecasts and accuracy metrics ship with Demantra. They include:

Waterfall: 4 week, 8 week and 13 week lag forecasts and accuracy metric series are available.

Demand Analysis: Accuracy series for the current forecast are available.

2. The Exception Filter indirectly controls which combinations the users can see. When you apply an exception,
you specify a true/false expression that specifies a series, an operator, and a value. For example: Sales > 50000.
Combinations are only displayed if this expression is true for at least some of the time buckets in the time range of
interest. You can specify multiple expressions and relate them by logical AND or logical OR.

3. A workflow is a set of user-defined steps connected together in a logical order. Each step can be automated, or
can require interaction from one or more users or groups. Workflows can do all the following kinds of actions:

Run integration interfaces.

Run stored database procedures.

Run external batch scripts and Java classes.

Pause the workflow until a specific condition is met, possibly from a set of allowed conditions. For example, a
workflow can wait for new data in a file or in a table.

The Waterfall Analysis Product Category & Org worksheet has a defined exception filter that has flagged a number of
instances where Adjusted History < 100.

Configure to order

1. Configure to order products are configurations of components depending on the customer's preference. In
most cases, this includes a selected base product (the model), the mandatory components, and the options.

Configure to order works on the principle of dependent demand forecasting. Dependent Demand Forecasting is the
capability to forecast demand for partially or fully dependent products whose demand depends wholly or partially on
the demand for another product.

To forecast the dependent demand for an option, you must first determine the probability or likelihood that an item
will be purchased when another item is purchased. Either the EBS planning percent (known as the Plng Pct Existing)
or the sales history (known as the Plng Pct History) can be used to specify the probability for Demantra forecasting.
For:

Mandatory items, the probability is 100%

Optional items, the probability of all the options together usually total 100%. In some cases, options can be
greater that 100%. For example, tires have a 400% planning percent for a car.

Configure to Order (CTO) worksheets provide you with planning information about base models, their associated bill of
materials (BOM), and planning percentages. The base model, BOM, and planning percentages are downloaded from
EBS to help you plan the options associated with base models.

2. The Configure to Order (CTO) worksheets allow you to override the planning percentages, forecast
dependency demand and consensus forecast to create forecasts that are in turn, uploaded to EBS for further
processing.
When the consensus forecast is updated for a parent item in a base model, it changes the amounts planned for the
dependent options. You can specify which planning percentage you want to use (EBS existing or sales history) for
each item, and override the planning percentages if desired.

New Product Introduction

1. From the worksheet, the Create Similar Product method can create a new product or be executed on an
existing product with no historical data.

The Create Similar Product method is context based: the product on which it is initiated serves as the basis for
population and data for the new item. The launch date, end launch date and cannibalization percentage can be set,
and forecasts simulated.

2. When you create a similar product, the combinations generated depend on the filters in place on the
originating worksheet.

3. Sometimes a new product you create will supersede an existing product. Within the Create New Product form,
Cannibalization Percentage is used when the new item's launch is expected to negatively impact sales of the source
item. The value entered in the Cannibalization Percentage can be between 0 and 100, and signifies how much of the
source product's volume is expected to be cannibalized by the new item. If the new item is replacing the existing
product, set this field to 100.

If cannibalization is set above 0%, the Launch Date and End Launch Period fields drive the period of time over which
the cannibalization will be used. The expectation is that cannibalization will be zero before the Launch period and will
ramp up during the ramp period reaching the full cannibalization percentage at the last date of the launch period. For
example, if the Launch Date is June 1, 2009, End Launch Period is June 29, 2009, and Cannibalization Percentage is
100%: This is a 5 week period and therefore cannibalization will be 20,40,60,80 and 100% for the 5 weeks. When The
cannibalization percentage reaches 100%, it is assumed the source product will cease selling from that day forward,
as it is completely super ceded by the new product.

4. When an item is created using the Create Similar Product method, links are made to the source product to
produce a realistic forecast now and in the future. Sometimes, during the planning cycle, you may want to change
the assumptions that link the source and target products such as the launch date, end launch period or
cannibalization. To help you with this task, you can use the Edit Lifecycle Definition worksheet and method. After
running the method, the links between the source and target products will be updated for all the affected
combinations.

5. When introducing new products using the Create Similar Product method, you may inadvertently create wrong
combinations, or need to streamline the combinations in your forecast. The Remove Combinations worksheet and
method have been designed to help you manage your combinations quickly. This feature is only available to those
users who have been granted the appropriate permission level to remove combinations.

MANAGING MEMBERS

1. Demantra Demand Management provides shortcuts for performing specific functions. These shortcuts are
called methods. Configured by the administrator, methods can be made available from worksheets, the Collaborator
Workbench Dashboard, or other content pane.

In particular, methods can be created to assist certain users with adding, editing, viewing and deleting items. Methods
are run from the worksheet using the right-click menu.

2. The Member Management tool within the Demand Planner enables you to manage your existing item/location
combinations. From this tool, you can copy, edit, rename, and delete members. In addition, the Member Management
tool enables you to create item/location combinations to represent new products for forecasts. Combinations are
stored in the mdx_matrix table.

The Member Management tool works with the Chaining Management tool to allow you to build sample historical data
which you can use for forecasting.
3. The Member Management tool within the Demand Planner application enables you to create item/location
combinations to represent new products for forecasts. Combinations are stored in the mdx_matrix table. If desired,
you insert placeholder historical data with zero values into the database for each combination prior to generating
sample historical data with the Chaining Management tool.

CHAINING:

When your new product introduction scenario is too complex to be handled by the Create Similar Product method, use
the Chaining feature. Chaining gives you the capability to create sample historical data for each time period based on
a mix of item and location variables.

1. A Chaining Workflow needs to be running in the background to enable the chaining functionality to work. You
can create and start the Chaining Workflow through the Workflow Manager.
2. Chaining is the process of copying series data from source combinations to target combinations. Typically, you
do this after you have created a new member or new combinations, so that Oracle Demantra has data to use when
forecasting. While you set up a chaining operation, you specify each series data to copy, a range of dates to copy
from, a date to start pasting to, and an optional multiplicative factor for that series. During the chaining operation,
Oracle Demantra aggregates the series data and then splits it across the target combinations, according to your
choice of split mechanism. Oracle Demantra saves the details of the chaining operation, which means that you can run
the same operation later if needed.

Shaping data

Shaping data is another technique used for creating accurate forecasts for new products. If there is a pattern evident
when introducing similar products, that pattern can be applied to the forecast for a new product. Demantra Demand
Management provides the tools to record the pattern and specify the time periods to which the pattern will be
applied.

Another technique, shape alignment, helps to align the forecast with the actual results as they become available,
ensuring that your forecast accuracy is maximized.

1. Causal factors provide information about historical events that are expected to recur in the future. Causal
factors cause demand to deviate from a trend. More specifically, a causal factor is a time-varying quantity (such as
price, season, or day of the week) that affects demand. Demantra requires historical data for causal factors, as well as
future data that describes expected occurrences that will affect demand.

There are three types of causal factors:

1. Global causal factors apply to all item-location combinations. For example, a season is a global causal factor.
Most Demantra implementation use global factors. Oracle provides a set of base causal factors.

2. Local causal factors apply to specific item-location combinations. For example, a discount applied to a specific
item in a specific sales region is a local causal factor. Price is another local causal factor. Local causal factors
include "activities", which are a special kind of local causal factor that supports activity shape modeling.

3. Promotional causal factors apply to specific item-location combinations and to specific promotions. Promotional
causal factors are available only within Promotion Effectiveness. Promotional causal factors are based on the
attributes of the promotions in the system. You can use promotional causal factors to perform promotional
shape modeling.

2. Demantra can capture the shape of performance for a specific time period and apply it to a new product and
location combination. This is particularly helpful when forecasting the launch of a new product as you can apply the
shape of similar product launches to improve your forecast accuracy. Once the shape has been recorded, you can
apply it to specific time periods for the new product. Recording and applying a performance shape requires the
configured activity causal factor series to be available in the worksheet.

3. Once actual sales data is available, the shape applied to a new product for forecasting purposes can be
adjusted or aligned. Future simulations take into account the shape model and alignment information to further refine
forecasts.

Two weeks into your forecast, assume you want to fine-tune the shaped forecast based on actual events. Upon
completion of this topic, you will be able to adjust shaped forecasts with shape alignment.