Many businesses consider alignment to forecast as their primary metric to become better.I believe that this metric is putting you on the wrong path. Instead,Build your processes and supply chain which can quickly identify what the customer needs. And supply to each store or warehouse exactly what THAT location needs. Read more…
1. MYTH #1: Aggregation or Disaggregation has no impact on variation. At a store, an item may sell between 10 to 100 pieces (10x Variation)For manufacturer, the difference might be 1,000 to 2,000 pieces (2x Variation). The more disaggregated the data is, the higher the variation. 2. MYTH #2: Sophisticated 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…
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…
Every company has different inventory model needs. Challenges vary widely, depending on a company’s 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, “It’s tough to make predictions, especially about the future.” While there’s 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…
1. If your product market life is long (think Consumer goods business / grocery business / Core / Never out of stock Items in fashion business) then you can save 10% of your costs by implementing a system that replenishes goods based on actual consumption rather than on projected consumption. 2. Read more…
Demand uncertainty and supply rigidity often create inventory shortages. The immediate consequence of inventory shortages might be significant lost sales and revenue ; however, the impact of stockouts cannot be fully evaluated without understanding how inventory shortages influence long-term customer behaviour. In practice, the most common tactic for preventing stock outs Read more…
Today, many consumer goods companies have been forced to accommodate smaller markets, as these niches often provide the only path to growth and escape from heavy price competition. However newly launched products suffer from notoriously high failure rates! Surprisingly new products fail not because of technical shortcomings but because they Read more…
Research showing that while people may be quite aware that rare events can occur, and may even be able to imagine several examples, they consistently underestimate the probability of at least one such event (including the ones they didn’t imagine) occurring. In other words, we tend to underestimate the size Read more…