Shermanโs Law of Forecast Accuracy: โForecast Accuracy improves in direct correlation to its distance from usefulness.โ The statistical forecast is only useful when determining a basis for segmentation, analyzing patterns and creating baseline forecasts. As a result, statistical forecasts about stock keeping units (SKUs) at the location level, for example, Read more…
Digitizing your business will give you the data you need to sense, shape and respond to demand changes in real time. This will also allow you to apply scientific principles and derive more accurate demand forecasts.Going digital doesnโt break down silos, but it does help to horizontally integrate your organization Read more…
Below are our top four demand planning best practices which will not only mitigate biases and heuristics (mental shortcuts that allows people to solve problems and make judgments quickly and efficiently), but improve overall planning performance. 1. ๐๐จ๐งโ๐ญ ๐ฎ๐ฌ๐ ๐ฐ๐ก๐๐ญ ๐ฒ๐จ๐ฎ ๐๐จ๐งโ๐ญ ๐ฆ๐๐๐ฌ๐ฎ๐ซ๐. It is never good enough to assume Read more…
๐๐ฏ๐๐ซ๐๐จ๐ง๐๐ข๐๐๐ง๐๐. Overconfidence is a set of biases rooted in an unjustified certainty in the legitimacy of oneโs opinions.In a study done, demand planners were more than 10% more likely to be overconfident that non-demand planners. This phenomenon is consistent with other research that finds for groups of people whose opinions Read more…
One premise of economics is that when faced with choices of varying value, people will choose the greatest value. When they donโt, they are deemed irrational. The reality is that all of us make irrational decisions all the time, because decision-making is rarely clear-cut. Indeed, research over the last 40 Read more…
Ans: Demand Planning The biggest cost to companies is NOT the cost of employees, or raw material, or sales or even advertising.The biggest cost to companies is the imbalance between the demand for their products and the companies ability to meet the demand. Unfortunately, many companies tend to ignore this Read more…
2 different quotes come to my mind when I read ‘Keep it simple’. The first is the quote by Steve Jobs who said, โSimple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because Read more…
Every company has different inventory model needs. Challenges vary widely, depending on a companyโs business model, size, geographic location and industry sector, among other factors. Even within a company, there are several different situations that require some form of demand sensing and response for management control. Before tackling the demand Read more…
Yogi Berra once said, โItโs tough to make predictions, especially about the future.โ While thereโs no magic formula for forecasting, there are several steps that companies can take to mitigate uncertainty and improve their demand planning capabilities. Knowing these steps is critical in helping companies avoid issues further down the Read more…
Apple CEO Tim Cook joined as supply chief when Apple was struggling, and with his just-in-time inventory genius turned things around.Cook loathes inventory, telling Forbes he finds it โfundamentally evilโ. โInventory is like dairy products,โ he has also said. โNo one wants to buy spoiled milk.โ Thanks to his JIT Read more…