The Smart Forecaster

Pursuing best practices in demand planning, forecasting and inventory optimization

Optimizing Inventory around Suppliers´ Minimum Order Quantities

Optimizing Inventory around Suppliers´ Minimum Order Quantities

Recently, we had an interesting conversation with an inventory manager and the VP Finance. We were discussing the benefits of being able to automatically optimize both reorder points and order quantities. The VP Finance was concerned that given their large supplier required minimum order quantities, they would not be able to benefit. He said his suppliers held all the power, forcing him to accept massive minimum order quantities and tying his hands. While he felt bad about this, he saw a silver lining: He didn’t have to do any planning. He would accept a large inventory investment, but his customer service levels would the exceptional. Perhaps the large inventory investment was assumed to be the cost of doing business.

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Thoughts on Spare Busses and Spare Parts

Thoughts on Spare Busses and Spare Parts

The Covid19 pandemic has placed unusual stress on public transit agencies. This stress forces agencies to look again at their processes and equipment. This blog focuses on bus systems and their practices for spare parts management. However, there are lessons here for other types of public transit, including rail and light rail

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Stay the course

Stay the course

We’ve found that a few things help new customers exploit the power of advanced analytics for forecasting and inventory optimization. One is having a champion among management, an executive sponsor, who can vouch for the commercial importance of a successful implementation while ensuring the users are supported with continuing education.

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Goldilocks Inventory Levels

Goldilocks Inventory Levels

You may remember the story of Goldilocks from your long-ago youth. Sometimes the porridge was too hot, sometimes it was too cold, but just once it was just right. Now that we are adults, we can translate that fairy tale into a professional principle for inventory planning: There can be too little or too much inventory, and there is some Goldilocks level that is “just right.” This blog is about finding that sweet spot.

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Inventory Planning Becomes More Interesting

Inventory Planning Becomes More Interesting

Just-In-Time (JIT) ensures that a manufacturer produces only the necessary amount, and many companies ignore the risks inherent in reducing inventories. Combined with increased globalization and new risks of supply interruption, stock-outs have abounded. So how can you execute a real-world plan for JIT inventory amidst all this risk and uncertainty? The foundation of your response is your corporate data. Uncertainty has two sources: supply and demand. You need the facts for both.

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Increasing Revenue by Increasing Spare Part Availability

Increasing Revenue by Increasing Spare Part Availability

Let’s start by recognizing that increased revenue is a good thing for you, and that increasing the availability of the spare parts you provide is a good thing for your customers. But let’s also recognize that increasing item availability will not necessarily lead to increased revenue. If you plan incorrectly and end up carrying excess inventory, the net effect may be good for your customers but will definitely be bad for you. There must be some right way to make this a win-win, if only it can be recognized.

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Four Useful Ways to Measure Forecast Error

Four Useful Ways to Measure Forecast Error

In this video, Dr. Thomas Willemain, co-Founder and SVP Research, talks about improving Forecast Accuracy by measuring Forecast Error. We begin by overviewing the various types of Error Metrics: Scale-dependent error, Percentage error, Relative error, and Scale-free error Metrics. While some error is inevitable, there are ways to reduce it, and forecast metrics are necessary aids for monitoring and improving forecast accuracy. Then we will explain the special problem of intermittent demand and divide-by-zero problems. Tom concludes by explaining how to assess forecasts of multiple items and how it often makes sense to use weighted averages, weighting items differently by volume or revenue.

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Improve Forecast Accuracy by Managing Error

Improve Forecast Accuracy by Managing Error

In this video, Dr. Thomas Willemain, co-Founder and SVP Research, talks about improving Forecast Accuracy by Managing Error. This video is the first in our series on effective methods to Improve Forecast Accuracy.  We begin by looking at how forecast error causes pain and the consequential cost related to it. Then we will explain the three most common mistakes to avoid that can help us increase revenue and prevent excess inventory.

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Coping with Surging Demand During the Rebound

Coping with Surging Demand During the Rebound

Many of our customers that saw demand dry up during the pandemic are now seeing a significant demand surge. Other customers in critical industries like plastics, biotech, semiconductors and electronics saw demand surges starting as far back as last April. For suggestions about how to cope with these situations, please read on.

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Recent Posts

  • Smart Software and Arizona Public Service to Present at WERC 2022
    Smart Software CEO and APS Inventory Manager to present WERC 2022 Studio Session on implementing Smart IP&O in 90 Days and achieve significant savings by optimizing reorder points and order quantities for over 250,000 spare parts. […]
  • Optimizing Inventory around Suppliers Minimum Order QuantitiesOptimizing Inventory around Suppliers´ Minimum Order Quantities
    Recently, we had an interesting conversation with an inventory manager and the VP Finance. We were discussing the benefits of being able to automatically optimize both reorder points and order quantities. The VP Finance was concerned that given their large supplier required minimum order quantities, they would not be able to benefit. He said his suppliers held all the power, forcing him to accept massive minimum order quantities and tying his hands. While he felt bad about this, he saw a silver lining: He didn’t have to do any planning. He would accept a large inventory investment, but his customer service levels would the exceptional. Perhaps the large inventory investment was assumed to be the cost of doing business. […]