The focus of the traditional supply chain organization is cost management. Saving money does not drive value. Improving cost also does not necessarily improve margin. Holistic organizational thinking is a marked departure from traditional functional thinking, shifting the need for new forms of analytics and reporting. For example, today, while most organizations Read more…
A limitation, which can be removed immediately after identification, is just an obstacle. But a limitation, which cannot be removed for significant time duration, is a constraint. All obstacles can be and should be removed immediately, but a constraint cannot be removed in the immediate future. There will always be a limitation Read more…
Its Counter intuitive. But true.Ordering more than you actually need makes shortages worse. Typically, a retailer or manufacturer only orders as much as they think they can sell or consume until the next cycle begins. But sometimes a hot seller comes along, or you hear a part is going to Read more…
“No one in the supply chain has sold till the time the end customer has bought.” This seemingly simple diktat is hard to put in practise, after all, why do I care if my customer’s customer is buying my stuff or not. Err.. Turns out that you should! In one Read more…
Sherman’s Law of Forecast Accuracy: “Forecast Accuracy improves in direct correlation to its distance from usefulness.” 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 doesn’t 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. 𝐃𝐨𝐧’𝐭 𝐮𝐬𝐞 𝐰𝐡𝐚𝐭 𝐲𝐨𝐮 𝐝𝐨𝐧’𝐭 𝐦𝐞𝐚𝐬𝐮𝐫𝐞. It is never good enough to assume Read more…
𝐎𝐯𝐞𝐫𝐜𝐨𝐧𝐟𝐢𝐝𝐞𝐧𝐜𝐞. Overconfidence is a set of biases rooted in an unjustified certainty in the legitimacy of one’s 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 don’t, 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…