Tag Archives: forecasting

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

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

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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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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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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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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Recommended Resource: The IIF

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.

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Recommended Resource: ‘Practical Time Series Forecasting: A Hands-On Guide’, by Galit Schmueli

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.

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6 Essential Steps to Better Recovery Planning

Venn diagram illustratnig the inventory sweet spotAs 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

Leading Indicators can Foreshadow Demand

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.

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