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
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.
A 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?
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?
“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.
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.
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.
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?
Smart Software recently announced a Software as a Service (SaaS) option for SmartForecasts—SFCloud™. 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.
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.
A go-to source for info on cutting-edge forecasting research, the International Institute of Forecasters (IIF) publishes journals and hosts conferences that we have relied on for decades. In this introduction, IIF Business Manager Pam Stroud gives an overview of the organization’s offerings. (Smart Software Senior Vice President for Research Tom Willemain serves on the Editorial Board of the IIF’s practitioner-oriented publication, Foresight.)
When founded in 1981, the IIF set as its goal: “Bridge the gap between theory and practice, with practice helping to set the research agenda and research providing useful results”. The IIF keeps its members abreast of the latest trends and research in forecasting through its publications, events and website. Its members are drawn from corporations and institutes of higher learning in more than one hundred countries, and form a vibrant community for networking and professional development.
A readable, well-organized textbook could be invaluable to “help corporate forecasters-in-training understand the basics of time series forecasting,” as Tom Willemain notes in the conclusion to this review, originally published in Foresight: The International Journal of Applied Forecasting. Principally written for an academic audience, the review also serves inexperienced demand planning professionals by pointing them to an in-depth resource.
This neat little book aims to “introduce the reader to quantitative forecasting of time series in a practical, hands-on fashion.” For a certain kind of reader, it will doubtless succeed, and do so in a stylish way.