The Smart Forecaster

 Pursuing best practices in demand planning,

forecasting and inventory optimization

Physicists like my Smart Software co-founder, Dr. Nelson Hartunian, tell us civilians that everything is different when we drill down to the tiniest level of the world. 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.

Consider quantum superposition. Briefly, superposition means any quantum entity can be in two states at once. Schrödinger’s cat is the most famous illustration of this idea. But how many of you readers are also in a state of superposition? Don’t you find yourself being a manager of a team yet a member of your supervisor’s team, a trouble-shooter yet also a forecasting expert or an inventory optimizer and…? And doesn’t all this make you sometimes feel, like that cat, that you are simultaneously both dead and alive? Modern software can ease some of this burden by automating the tasks of demand planning and inventory optimization. The rest is up to you.

A second quantum analog is entanglement. Briefly, entanglement is the linkage between two elements of a system. They can be light years apart, yet changing one part of an entangled system will instantaneously change the other part. This bugged Albert Einstein, who derided it as “spooky action as a distance.” In our regular world, demand planning and inventory optimization are entangled, since the process of inventory optimization sits on top of the process of demand forecasting. Modern software links the two in an efficient interface.

Finally, the quantum foam – one of my favorite ideas. As I understand it, quantum foam is a substitute for empty space: there is no empty space, rather a constant bubbling of “vacuum energy” accompanied by a flux of “virtual particles” being born out of nothing and then disappearing back into nothing. In the supply chain world, the analogs of virtual particles are customer orders. Often it seems that they pop up with no warning out of thin air, and sometimes they disappear by cancellation in an equally random and mysterious process. This kind of demand fluctuation is the basis for all the theory of inventory control. Modern software therefore begins with probability models of customer demand. Those models then have implications for such tangible quantities as safety stocks, reorder points, and order quantities.

Does it really help demand planners and inventory managers to think about these ideas from quantum physics? Well, it’s a bit of fun to see the analogies to our regular world of work. And they do remind us of more macroscopic matters: the basic concepts of the need to deal with more than one task simultaneously, the linkage between forecasting and inventory management, and randomness as the fundamental feature of the supply chain.

 

 

 

Leave a Comment

Related Posts

Leveraging Epicor Kinetic Planning BOMs with Smart IP&O to Forecast Accurately

Leveraging Epicor Kinetic Planning BOMs with Smart IP&O to Forecast Accurately

In this blog, we explore how leveraging Epicor Kinetic Planning BOMs with Smart IP&O can transform your approach to forecasting in a highly configurable manufacturing environment. Discover how Smart, a cutting-edge AI-driven demand planning and inventory optimization solution, can simplify the complexities of predicting finished goods demand, especially when dealing with interchangeable components. Learn how Planning BOMs and advanced forecasting techniques enable businesses to anticipate customer needs more accurately, ensuring operational efficiency and staying ahead in a competitive market.

The Next Frontier in Supply Chain Analytics

The Next Frontier in Supply Chain Analytics

We believe the leading edge of supply chain analytics to be the development of digital twins of inventory systems. These twins take the form of discrete event models that use Monte Carlo simulation to generate and optimize over the full range of operational risks. We also assert that we and our colleagues at Smart Software have played an outsized role in forging that leading edge.

Overcoming Uncertainty with Service and Inventory Optimization Technology

Overcoming Uncertainty with Service and Inventory Optimization Technology

In this blog, we will discuss today’s fast-paced and unpredictable market and the constant challenges businesses face in managing their inventory and service levels efficiently. The main subject of this discussion, rooted in the concept of “Probabilistic Inventory Optimization,” focuses on how modern technology can be leveraged to achieve optimal service and inventory targets amidst uncertainty. This approach not only addresses traditional inventory management issues but also offers a strategic edge in navigating the complexities of demand fluctuations and supply chain disruptions.

Recent Posts

  • Simple Inventory Optimization is Good Except When It Isn’t FHDSimple is Good, Except When It Isn’t
    In this blog, we are steering the conversation towards the transformative potential of technology in inventory management. The discussion centers around the limitations of simple thinking in managing inventory control processes and the necessity of adopting systematic software solutions. […]
  • Leveraging Epicor Kinetic Planning BOMs with Smart IP&O to Forecast Accurately HDLeveraging Epicor Kinetic Planning BOMs with Smart IP&O to Forecast Accurately
    In this blog, we explore how leveraging Epicor Kinetic Planning BOMs with Smart IP&O can transform your approach to forecasting in a highly configurable manufacturing environment. Discover how Smart, a cutting-edge AI-driven demand planning and inventory optimization solution, can simplify the complexities of predicting finished goods demand, especially when dealing with interchangeable components. Learn how Planning BOMs and advanced forecasting techniques enable businesses to anticipate customer needs more accurately, ensuring operational efficiency and staying ahead in a competitive market. […]
  • Two Multiechelon Inventory Optimization Neural Network AIThe Next Frontier in Supply Chain Analytics
    We believe the leading edge of supply chain analytics to be the development of digital twins of inventory systems. These twins take the form of discrete event models that use Monte Carlo simulation to generate and optimize over the full range of operational risks. We also assert that we and our colleagues at Smart Software have played an outsized role in forging that leading edge. […]
  • SMART JOINS EPICOREpicor Acquires Smart Software for AI-Powered Inventory Planning & Optimization Technologies
    The acquisition brings together two companies tightly aligned in helping organizations get to the right insights at the right time and take action to maximize business performance. . […]
  • Overcoming Uncertainty with Service and Inventory Optimization TechnologyOvercoming Uncertainty with Service and Inventory Optimization Technology
    In this blog, we will discuss today's fast-paced and unpredictable market and the constant challenges businesses face in managing their inventory and service levels efficiently. The main subject of this discussion, rooted in the concept of "Probabilistic Inventory Optimization," focuses on how modern technology can be leveraged to achieve optimal service and inventory targets amidst uncertainty. This approach not only addresses traditional inventory management issues but also offers a strategic edge in navigating the complexities of demand fluctuations and supply chain disruptions. […]

    Inventory Optimization for Manufacturers, Distributors, and MRO

    • Why MRO Businesses Need Add-on Service Parts Planning & Inventory SoftwareWhy MRO Businesses Need Add-on Service Parts Planning & Inventory Software
      MRO organizations exist in a wide range of industries, including public transit, electrical utilities, wastewater, hydro power, aviation, and mining. To get their work done, MRO professionals use Enterprise Asset Management (EAM) and Enterprise Resource Planning (ERP) systems. These systems are designed to do a lot of jobs. Given their features, cost, and extensive implementation requirements, there is an assumption that EAM and ERP systems can do it all. In this post, we summarize the need for add-on software that addresses specialized analytics for inventory optimization, forecasting, and service parts planning. […]
    • Spare-parts-demand-forecasting-a-different-perspective-for-planning-service-partsThe Forecast Matters, but Maybe Not the Way You Think
      True or false: The forecast doesn't matter to spare parts inventory management. At first glance, this statement seems obviously false. After all, forecasts are crucial for planning stock levels, right? It depends on what you mean by a “forecast”. If you mean an old-school single-number forecast (“demand for item CX218b will be 3 units next week and 6 units the week after”), then no. If you broaden the meaning of forecast to include a probability distribution taking account of uncertainties in both demand and supply, then yes. […]
    • Whyt MRO Businesses Should Care about Excess InventoryWhy MRO Businesses Should Care About Excess Inventory
      Do MRO companies genuinely prioritize reducing excess spare parts inventory? From an organizational standpoint, our experience suggests not necessarily. Boardroom discussions typically revolve around expanding fleets, acquiring new customers, meeting service level agreements (SLAs), modernizing infrastructure, and maximizing uptime. In industries where assets supported by spare parts cost hundreds of millions or generate significant revenue (e.g., mining or oil & gas), the value of the inventory just doesn’t raise any eyebrows, and organizations tend to overlook massive amounts of excessive inventory. […]
    • Top Differences between Inventory Planning for Finished Goods and for MRO and Spare PartsTop Differences Between Inventory Planning for Finished Goods and for MRO and Spare Parts
      In today’s competitive business landscape, companies are constantly seeking ways to improve their operational efficiency and drive increased revenue. Optimizing service parts management is an often-overlooked aspect that can have a significant financial impact. Companies can improve overall efficiency and generate significant financial returns by effectively managing spare parts inventory. This article will explore the economic implications of optimized service parts management and how investing in Inventory Optimization and Demand Planning Software can provide a competitive advantage. […]