Worst Practices in Forecasting

Leonard Jay Tashman

Foresight editor Leonard Jay Tashman

Companies launch initiatives to upgrade or improve their sales & operations planning and demand planning processes all the time. Many of these initiatives fail to deliver the results they should. Has your forecasting function fallen short of expectations? Do you struggle with “best practices” that seem incapable of producing accurate results? Continue reading

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    The Trouble With Turns

    In our travels around the industrial scene, we notice that many companies pay more attention to inventory Turns than they should. We would like to deflect some of this attention to more consequential performance metrics.
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      Managing the Inventory of Promoted Items

      In a previous post, I discussed one of the thornier problems demand planners sometimes face: working with product demand data characterized by what statisticians call skewness—a situation that can necessitate costly inventory investments. This sort of problematic data is found in several different scenarios. In at least one, the combination of intermittent demand and very effective sales promotions, the problem lends itself to an effective solution. Continue reading

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        The Scourge of Skewness

        Demand planners have to cope with multiple problems to get their job done. One is the Irritation of Intermittency. The “now you see it, now you don’t” character of intermittent demand, with its heavy mix of zero values, forces the use of advanced statistical methods, such as Smart Software’s patented Markov Bootstrap algorithm. But even within the dark realm of intermittent demand, there are degrees of difficulty: planners must further cope with the potentially costly Scourge of Skewness.
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          A Check on Forecast Automation with the Attention Index

          The text of a poem by Alec CairncrossA new metric we call the “Attention Index” will help forecasters identify situations where “data behaving badly” can distort automatic statistical forecasts (see adjacent poem). It quickly identifies those items most likely to require forecast overrides—providing a more efficient way to put business experience and other human intelligence to work maximizing the accuracy of forecasts. How does it work?
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            Too Much or Too Little Inventory?

            Gregory Hartunian Headshot

            Smart Software President Gregory Hartunian

            Do you know which items have too much or too little inventory? What if you knew? How would you go about cutting overstocks while still ensuring a competitive service level? Would you be able to reduce stockouts without incurring a prohibitively expensive inventory increase? How would these changes impact service levels, costs and turns—for individual items, groups of items and overall?

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              Forecasting and the Rising Tide of Big Data

              “Trillions of records of millions of people…Finding the useful and right information, understanding its quality and producing reliable analyzed data in a timely and cost-effective manner are all critical issues.”

              Smart Software Senior Vice President for Research Tom Willemain recently had the opportunity to talk with Dr. Mohsen Hamoudia, President of the International Institute of Forecasters (IIF), to discuss current issues with, and opportunities for, big data analytics. The IIF informs practitioners on trends and research developments in forecasting via print and online publications and the hosting of professional conferences.

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                Handling Extreme Supply Chain Variability at Rev-A-Shelf

                Headshot of Rev-A-Shelf's John Engelhardt

                John Engelhardt, Director of Purchasing and Asian Operations, Rev-A-Shelf

                Does your extended supply chain suffer from extreme seasonal variability? Does this situation challenge your ability to meet service level commitments to your customers? I have grappled with this at Rev-A-Shelf, addressing unusual conditions created by Chinese New Year and other global events, and would like to share the experience and a few things I learned along the way.

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                  Demand Forecasting in a “Build to Order” Company

                  We often come into contact with potential customers who claim that they cannot use a forecasting system since they are a “build-to-order” manufacturing operation. I find this a puzzling perspective, because whatever these organizations build requires lower level raw materials or intermediate goods. If those lower level inputs are not available when an order for the finished good is received, the order cannot be built. Consequently, the order could be canceled and the associated revenue lost.

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                    Truth in Forecasting—Practical Advice at Year’s End

                    Head shot of Turbide

                    Consultant Dave Turbide

                    At year’s end, we are often caught up in thinking and planning for the coming year. Did 2013 turn out the way you expected? Will 2014 be dramatically different? Are there other factors—things we are planning to do; things we think our competitors might do; outside forces like changing taste, demographics or economics—that might change the course of business in the coming year?

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                      Recommended Reading: Cloud Software Helps Overcome Budget Constraints

                      Smart Software recently announced a Software as a Service (SaaS) option for SmartForecastsSFCloud™. Premises-based perpetual licenses will continue to be the preferred software implementation method for many organizations, but there are many reasons why demand for cloud-based solutions is taking off. A vintage post by Bill Richardson at ApplicantStack Team Blog summarizes key benefits of the SaaS model.

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                        A CFO’s Perspective on Demand Planning – “More Strategic Than You Think”

                        Head shot of NKK Switches Vice President of Finance Bud Schultz

                        NKK Switches Vice President of Finance Bud Schultz

                        Bud Schultz, CPA, Vice President of Finance for NKK Switches, presented his company’s experience with demand planning during a recent webinar. The following is a brief summary of Bud’s key points; view the complete webinar by clicking here.

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