Top 3 Most Common Inventory Control Policies
To make the right decision, you’ll need to know how demand forecasting supports inventory management, choice of which policy to use, and calculation of the inputs that drive these policies.The process of ordering replenishment stock is sufficiently expensive and cumbersome that you also want to minimize the number of purchase orders you must generate.
Ten Tips that Avoid Data Problems in Software Implementation
Once a customer is ready to implement software for demand planning and/or inventory optimization, they need to connect the analytics software to their corporate data stream.This provides information on item demand and supplier lead times, among other things. We extract the rest of the data from the ERP system itself, which provides metadata such as each item’s location, unit cost, and product group.
Reveal Your Real Inventory Planning and Forecasting Policy by Answering These 10 Questions
In this blog, we review 10 specific questions you can ask to uncover what’s really happening with the inventory planning and demand forecasting policy at your company. We detail the typical answers provided when a forecasting/inventory planning policy doesn’t really exist, explain how to interpret these answers, and offer some clear advice on what to do about it.
Want to Optimize Inventory? Follow These 4 Steps
Service Level Driven Planning (SLDP) is an approach to inventory planning based on exposing the tradeoffs between SKU availability and inventory cost that are at the root of all wise inventory decisions. When organizations understand these tradeoffs, they can make better decisions and have greater variability into the risk of stockouts. SLDP unfolds in four steps: Benchmark, Collaborate, Plan, and Track.
Riding the Tradeoff Curve
In the supply chain planning world, the most fundamental decision is how to balance item availability against the cost of maintaining that availability (service levels and fill rates). At one extreme, you can grossly overstock and never run out until you go broke and have to close up shop from sinking all your cash into inventory that doesn’t sell.
Quantum Inventory Theory?
Physics at the quantum level is quite weird – not at all like what we experience in our usual macroscopic life. Among the oddities are “superposition”, “entanglement”, and “quantum foam.” Weird as these phenomena are, I cannot help seeing analogs in the supposedly different world of supply chain management.
Stop Leaking Money with Manual Inventory Controls
An inventory professional who is responsible for 10,000 items has 10,000 things to stress over every day. Double that for someone responsible for 20,000 items. In the crush of business, routine decisions often take second place to fire-fighting: dealing with supplier hiccups, straightening out paperwork mistakes, recovering from that collision between a truck and the loading dock.
Key Considerations When Evaluating your ERP system’s Forecasting Capabilities
Consider what is meant by “demand management”, “demand planning”, and “forecasting”. These terms imply certain standard functionality for collaboration, statistical analysis, and reporting to support a professional demand planning process. However, in most ERP systems, “demand management” running MRP and reconciling demand and supply for the purpose of placing orders
The 3 Types of Supply Chain Analytics
The three types of supply chain analytics are “descriptive”, “predictive”, and “prescriptive.” Each plays a different role in helping you manage your inventory. Modern supply chain software lets you exploit all three helping you to reduce inventory costs, improve on time delivery and service levels, while running a more efficient supply chain.
The Top 5 Myths about Demand Planning Implementations
We just need to feed our demand histories into our new statistical methods, and we can start planning more effectively. Not quite: it’s about the technology and the process. You are investing in a new business process to develop forecasts for driving business strategy and inventory planning decisions.
The Right Forecast Accuracy Metric for Inventory Planning
Testing software solutions via a series of empirical competition can be an attractive option. In the case of forecasting and demand planning, a traditional “hold out” test is a good way to assess monthly or weekly forecast accuracy, but it is minimally useful if you have a different objective: Optimizing inventory.
Protect your Demand Planning Process from Regime Change
No, not that kind of regime change: Nothing here about cruise missiles and stealth bombers. And no, we’re not talking about the other kind of regime change that hits closer to home: Shuffling the C-Suite at your company. In this blog, we discuss the relevance of regime change on time series data used for demand planning and forecasting.
Don’t Become a Victim of Your Forecast Models
Generally, the supply chain field has lagged behind finance in terms of the use of statistical models. My university colleagues and I are chipping away at that, but we have a long way to go. Some supply chains are quite technically sophisticated, but many, perhaps more, are essentially managed as much by gut instinct as by the numbers. Is this avoidance of analytics safer than relying on models?
How to Tell You Don’t Really Have an Inventory Planning and Forecasting Policy
You can’t properly manage your inventory levels, let alone optimize them, if you don’t have a handle on exactly how demand forecasts and stocking parameters (such as Min/Max, safety stocks, and reorder points, and order quantities) are determined. Many organizations cannot specify how policy inputs are calculated or identify situations calling for management overrides to the policy. If you have these problems, you may be wasting hundreds of thousands to millions of dollars each year in unnecessary shortage costs, holding costs, and ordering costs.
The 3 levels of forecasting: Point forecasts, Interval forecasts, Probability forecasts
There are three possible types of forecasts that can be used in demand and inventory planning processes. Point forecasting, interval forecasting, and probabilistic forecasting. Each type of forecast offers progressively more information to inventory managers that will enhance the planning process. In this video blog, Dr. Thomas Willemain explains the differences and highlights the advantages that probabilistic forecasting offers. In summary, knowing more is always better than knowing less and the probability forecast provides additional information that is crucial for inventory planning.
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Smart Software to Present at P21WWUG CONNECT 2020Smart Software today announced that Dr. Thomas Willemain, co–Founder and SVP Research, will present the Video Session "Top Inventory Policies Explained" at P21WWUG CONNECT 2020 from August 14 - September 11 , 2020. . […]
Six Steps Up the Learning Curve for New PlannersIf you are a new professional in the field of inventory management, you face a very steep learning curve. There are many moving parts in the system you manage, and much of the movement is random. You may find it helpful to take a step back from the day-to-day flow to think about what it takes to be successful. Here are six suggestions that you may find useful; they are distilled from working over thirty five years with some very smart practitioners. […]