Tools of the Trade: How “Forecastable” is Your Data? Complexity Exists Whether You Ignore It or Not

These “key tools” balance a need for simple with a need to handle the complexity of SCM – following the IBM adage – complexity exists whether you ignore it or not, best not to ignore it.

Pyramid Forecasting Process

One of the many ways to improve the forecast is to forecast using a pyramid process, starting at the base, then forecasts the subsequent levels moving upwards. The objective of using the pyramid forecast process is to use the less detailed portions of the pyramid to improve the base level forecast of the pyramid.

By |2021-10-26T22:18:53-04:00November 2nd, 2021|Demand Planning, Forecasting|0 Comments

Going Beyond Historical Data for Forecast Accuracy

Our focus in this blog series has been to establish forecast accuracy targets. In very general terms, the goal should be to add value to the business through the forecasting process. We have however focused on the forecast value add and using that to create a minimum acceptable forecast accuracy target in the previous blog. Now we will take that a step further and talk of ways of improving it.

Relationship Between Forecast Accuracy and Safety Stocks

A company’s total inventory is built up of many different parts such as strategic stock, anticipation stock, safety stock, cycle stock, unplanned stock. The cycle stock is the one most connected to the demand forecast; it is expected to be sold as the forecast becomes real demand. Safety stock on the other hand is extra stock to deal with the variability of the demand or supply. As such, it is not always linked to forecasting accuracy.

How Forecastable is Your Data?

Having access to an accurate forecast is very beneficial for businesses. If used correctly, it can provide better margins, increase market shares, and many other positive results. At a more tactical level, it can help reduce the costs associated with meeting the customer demand and make the supply chain more efficient.

Using Coefficient of Variability to Drive Safety Stock Related Decisions

In a previous blog post, we discussed how a high or low value of Coefficient of Variation (CV) impacts the first or second term of safety stock. Today we decided to put this to the test using real customer data - here we will discuss our findings.

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