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.
In my previous post in this series on essential concepts, “What is ‘A Good Forecast’”, I discussed the basic effort to discover the most likely future in a demand planning scenario. I defined a good forecast as one that is unbiased and as accurate as possible. But I also cautioned that, depending on the stability or volatility of the data we have to work with, there may still be some inaccuracy in even a good forecast. The key is to have an understanding of how much.
In a recent post at SupplyChainBrain, Robert Bowman takes a look at excellence in demand planning. Focusing on admirable qualities and techniques, it should be an interesting read for any demand planner seeking to improve his or her craft.
As we approach the midpoint in 2013, there is still a lot of economic uncertainty complicating your supply chain planning processes. Some look at this shaky economy and postpone needed investments that can position their organizations for a strong future.
However, this is not the time to retreat from your supply chain improvement initiatives. Rather, it’s a time to double-down on your efforts to prepare for the inevitable business opportunities that lie ahead.
Economic recovery is a time of sales opportunities. You want to make sure that you’re prepared to take advantage of them. Good demand and inventory planning can help. Continue reading
Posted in Business Policy, Intermittent Demand
Tagged economic recovery, forecasting, forecasting technology, intermittent demand, lead time, optimizing inventory, S&OP, service levels, supply chain, supply chain planners
Are you a hero?
The executive suites at most companies are populated by leaders who became corporate “heroes.” These exceptional performers led—and continue to lead—transformative initiatives that drive revenue growth, reduce costs and increase shareholder value.
Most statistical forecasting works in one direct flow from past data to forecast. Forecasting with leading indicators works a different way. A leading indicator is a second variable that may influence the one being forecasted. Applying testable human knowledge about the predictive power in the relationship between these different sets of data will sometimes provide superior accuracy.
The unique challenges of inventory planning for spare parts, large capital goods and other infrequently or irregularly moving items drives the importance of finding smarter methods to forecast this kind of intermittent demand. Robert Bowman, Editor of Supply Chain Brain Magazine, and I discussed this topic at the October APICS conference in Denver, and video of our conversation is available at Supply Chain Brain‘s website.
Posted in Intermittent Demand
Tagged APICS, forecasting, intermittent demand, interview, irregular demand, large capital goods, service parts, spare parts, stocking, video, zero demand
Smart Software President Nelson Hartunian, PhD
Tremendous cost-saving efficiencies can result from optimizing inventory stocking levels using the best predictions of future demand. Familiarity with forecasting basics is an important part of being effective with the software tools designed to exploit this efficiency. This concise introduction (the first in a short series of blog posts) offers the busy professional a primer in the basic ideas you need to bring to bear on forecasting. How do you evaluate your forecasting efforts, and how reliable are the results?
The destructive impact of Hurricane Sandy has been both staggering and instructive. Our thoughts and best wishes for rapid recovery go out to all who have suffered personal or economic loss or damage. Now, in Sandy’s aftermath, we find ourselves thinking about accelerating recovery and planning for the next unforeseen event.
Our work with clients in the heavily hit mass transit sector presented a sobering view of damaged infrastructure, heavy equipment, and losses of essential inventory. Those most affected have seen a crush of work as inventory managers take stock of what they have, what they need and procure a mountain of replacement parts and products. This uniquely massive replenishment cycle presents all sorts of opportunities and considerations. For those who are still in this phase, and to help our collective preparation for the Next Big Event, here are a few thoughts:
Morgan Drawbridge, South Amboy, NJ, following Superstorm Sandy
Photo courtesy njtransit.com
Posted in Business Policy, Intermittent Demand
Tagged damaged infrastructure, federal relief, forecasting, hurricane, insurance, intermittent demand, inventory, recovery, safety stock, sandy, service level, superstorm
Fluctuations in an inventory supply chain are inevitable. Randomness, which can be a source of confusion and frustration, guarantees it. A ship carrying goods from China may be delayed by a storm at sea. A sudden upswing in demand one day can wipe out inventory in a single day, leaving you unable to meet the next day’s demand. Randomness creates frictions that make it hard to do your job.
At first blush, it sometimes seems best to respond to randomness with the ostrich approach: head buried in the sand. You can settle on a prediction and proceed on the assumption that the prediction will always be spot on. The flaw in that approach is that it ignores statistical methods that allow us to make use of a wealth of knowledge about our knowledge itself—how confident we can be in our predictions, and what breadth of possibilities confront us. The efficient approach to tackling the problems that stem from randomness is not to ignore uncertainty, but to embrace it with eyes open.
Posted in Excellence in Forecasting
Tagged average, contingencies, forecasting, inventory, overstocking, randomness, raw materials, reliability, staffing, stocking, supply chain, uncertainty, understocking
Dr. Greg Parlier (Colonel, U.S. Army, Retired)
Contributed to The Smart Forecaster by Dr. Greg Parlier (Colonel, U.S. Army, retired). Details on Dr. Parlier’s background conclude the post.
For over two decades, the General Accounting Office (GAO) has indicated that the Defense Department’s logistics management has been ineffective and wasteful, and that the Services lack strategic plans to improve overall inventory management and supply chain performance.
Posted in Business Policy, Guest Posts
Tagged analytics, armed services, decision support, efficiency, ERP, force readiness, innovation, inventory levels, logistics, management information, organizational design, performance analysis, supply chain, US Army