Although no business likes carrying safety stock, experiencing a stockout simply isn’t worth the risk to customer satisfaction. Take an industry-informed look at how to achieve demand planning ‘greatness’ when it comes to optimizing your inventory levels and still meeting customer requirements.
“No one ever achieved greatness by playing it safe.”
This quote is attributed to Harry J. Gray, an iconic business manager and philanthropist who, through acquisition, assembled one of America’s largest manufacturing corporations. During his career, he received numerous recognitions and honors and was inducted into the Junior Achievement National Business Hall of Fame. My guess is that Mr. Gray was an expert at risk assessment and containment.
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Tags: buffer inventory,
demand planning,
forecast,
industry-informed,
inventory management,
replenishment planning
The traditional role of wholesalers is quite simple; they buy significant quantities of products from different manufacturers, store them in warehouses and resell them to customers, whether retail, industrial, commercial, institutional or contractors. Their role is to have the right product when it is needed, at the lowest price. Pretty simple.
That was all good in the past, but now things are changing — and changing fast! In the last 5-10 years, companies like Amazon, Alibaba and eBay have completely changed the dynamic of the shopping experience. Consumers now expect to find what they need easily, at the right price, with high quality, delivered to them where they need it, how they need it and when they need it. And, although consumers can be quite loyal (for example, always starting their search on Amazon.com), they will quickly go somewhere else when they don’t find what they need. How do I know? I do it all the time!
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Tags: adapt,
Analytics,
commercial,
contractors,
customers,
demand planning,
distribution,
distributors,
flexibility,
industrial,
institutional,
manufacturers,
partnerships,
retail,
supply chain execution,
tms,
value-added services,
wholesale,
wholesaler,
wms
There is a famous anecdote about Volvo car dealers heavily discounting green models because consumers preferred other colors. Volvo’s manufacturing plant, seeing the resulting spike in demand for green models, perceived it as consumer interest and upped the production. That’s right…even more green cars! Ouch!!
It’s a sad story that’s often repeated, and a story that begins with a demand-shaping strategy to offload unwanted inventory. It’s a prime example of the importance of distribution planning and how a dealer’s {read distributor’s} behavior can create confusion and lead to unnecessary increases in a manufacturer’s inventory holdings and, by extension, the stock of its suppliers, too.
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Tags: clean data,
data cleansing,
data sharing,
demand,
demand forecasts,
demand planning,
demand-shaping,
forecasting,
green cars,
historical demand,
information technology,
inventory,
predictability,
safety stock,
sharing,
spike,
stock-out,
supply chain demand planning,
trading partners,
Volvo
TECSYS develops innovative software products.
Yes, we are a provider of supply chain solutions (and hey, Your Supply Chain Matters!), but underpinning all of that is a team of software development professionals who build our products with the latest technologies and tools. And you, dear blog reader / TECSYS customer / supply chain professional, while assuredly you are interested in our solutions in areas such as demand planning and healthcare point-of-use, I thought you might also want to read something that appeals to your inner software geek!
Because we’re all software geeks these days – software is everywhere. Or as the internet visionary Marc Andreessen says, “Software is eating the world”. His thesis is that the ubiquity of software products and mobile devices has brought our society to a tipping point that will lead to profound change in business, education and healthcare. (Check out this fascinating interview with Andreesen.) The products we build at TECSYS are part of the process that he describes. So in recognition of the significance of software to all we do, I thought I’d tell you some more about our software – how it’s made, and why it’s made that way.
In the next few posts I’m going to write about about the technology and design decisions we are making at TECSYS and the rationale behind these decisions; I’ll describe how we go about developing software and the principles we use to guide our work; and I’ll give you some insights in to the challenges we face and how we overcome them. You will see that our clients and the users of our products are key players in our software development, and you’ll learn how you can influence that development. You’ll also gain a perspective on software development which can help you assess and evaluate all of the software you interact with, whatever its origin.
Software is eating the world; let TECSYS feed your inner software geek.
Tags: business,
change,
demand planning,
education,
geek,
healthcare,
inner geek,
innovation,
internet,
Marc Andreessen,
mobile devices,
point-of-use,
software development principles,
software development professionals,
software is eating the world,
supply chain solutions,
tipping point
Improved forecast accuracy leads to many downstream improvements in operations and ultimately, on the balance sheet. That is why Gartner, Inc., a highly respected information technology research and advisory firm, puts forecast accuracy at the top of its pyramid of supply chain metrics. In a study published in February 2012, Gartner stated that a 6% forecast improvement could improve the perfect order by 10% and deliver a 10-15% reduction in unnecessary inventory. These are very impressive numbers and a very good reason to work towards improving forecast accuracy.
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Tags: demand,
demand planning,
deviation,
erratic demand,
forecast accuracy,
forecasting,
forecasting model,
Gartner Inc.,
historical data,
low demand volume,
MAD,
MAPE,
Mean Absolute Deviation,
Mean Absolute Percentage Error,
metrics,
outliers,
unnecessary inventory
