What is the difference between Demand planning and Inventory optimization ?

The Smart Forecaster

Pursuing best practices in demand planning,

forecasting and inventory optimization

What is the difference between Demand planning and Inventory optimization ? 

The Smart Demand Planning app (SDP) provides demand forecasts. The SDP forecasting engine is also the core of the Smart Inventory Optimization app (SIO), which stress-tests various inventory policies using a number of demand scenarios to find optimal inventory policy settings.

 

 

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The Importance of Clear Service Level Definitions in Inventory Management

The Importance of Clear Service Level Definitions in Inventory Management

Inventory optimization software that supports what-if analysis will expose the tradeoff of stockouts vs. excess costs of varying service level targets. But first it is important to identify how “service levels” is interpreted, measured, and reported. This will avoid miscommunication and the false sense of security that can develop when less stringent definitions are used. Clearly defining how service level is calculated puts all stakeholders on the same page. This facilitates better decision-making.

The Cost of Spreadsheet Planning

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Companies that depend on spreadsheets for demand planning, forecasting, and inventory management are often constrained by the spreadsheet’s inherent limitations. This post examines the drawbacks of traditional inventory management approaches caused by spreadsheets and their associated costs, contrasting these with the significant benefits gained from embracing state-of-the-art planning technologies.

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      Forecasting Techniques for a more profitable business

      The Smart Forecaster

       Pursuing best practices in demand planning,

      forecasting and inventory optimization

      Improve Forecast Accuracy, Eliminate Excess Inventory, & Maximize Service Levels

       

      In this Video Dr. Thomas Willemain, co–Founder and SVP Research, defines and compares the most useful Forecasting Techniques: Exponential Smoothing, Single Exponential Smoothing, Holt’s Method and Winter’s Method.  These videos explain the basic thinking under each technique as well as the math behind them, how they are used in practice and the tradeoff of each method.

      Forecasting Techniques for a more profitable business
      Leave a Comment

      RECENT POSTS

      The Importance of Clear Service Level Definitions in Inventory Management

      The Importance of Clear Service Level Definitions in Inventory Management

      Inventory optimization software that supports what-if analysis will expose the tradeoff of stockouts vs. excess costs of varying service level targets. But first it is important to identify how “service levels” is interpreted, measured, and reported. This will avoid miscommunication and the false sense of security that can develop when less stringent definitions are used. Clearly defining how service level is calculated puts all stakeholders on the same page. This facilitates better decision-making.

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          TOP 3 COMMON INVENTORY POLICIES

          The Smart Forecaster

           Pursuing best practices in demand planning,

          forecasting and inventory optimization

          Inventory control policies and strategies for a more profitable business

          In this Video Dr. Thomas Willemain, co–Founder and SVP Research, defines and compares the three most used inventory control policies. These policies are divided into two groups, periodic review and continuous review. There is also a fourth policy called MRP logic or forecast based inventory planning which is the subject of a separate video blog that you can see here. These videos explain each policy, how they are used in practice and the pros and cons of each approach.

          Leave a Comment

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          The Importance of Clear Service Level Definitions in Inventory Management

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              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. […]

              Share, develop, and manage consensus demand plans

              The Smart Forecaster

               Pursuing best practices in demand planning,

              forecasting and inventory optimization

              Share, develop, and manage consensus demand plans to ensure inventory policy matches business strategy.

              Smart Inventory Optimization (SIO) creates planning scenarios. SIO starts with a “Live” scenario that shows where you are now. Various team members can create their own scenarios, perhaps dividing the work by product line or sales territory. One decision maker can then merge these scenarios into a consensus plan that becomes the “Goal” scenario, which drives the ERP system’s replenishment planning.

              Leave a Comment

              Related Posts

              The Importance of Clear Service Level Definitions in Inventory Management

              The Importance of Clear Service Level Definitions in Inventory Management

              Inventory optimization software that supports what-if analysis will expose the tradeoff of stockouts vs. excess costs of varying service level targets. But first it is important to identify how “service levels” is interpreted, measured, and reported. This will avoid miscommunication and the false sense of security that can develop when less stringent definitions are used. Clearly defining how service level is calculated puts all stakeholders on the same page. This facilitates better decision-making.

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              Companies that depend on spreadsheets for demand planning, forecasting, and inventory management are often constrained by the spreadsheet’s inherent limitations. This post examines the drawbacks of traditional inventory management approaches caused by spreadsheets and their associated costs, contrasting these with the significant benefits gained from embracing state-of-the-art planning technologies.

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                • Spare-parts-demand-forecasting-a-different-perspective-for-planning-service-partsThe Forecast Matters, but Maybe Not the Way You Think
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                  FORECAST DRIVEN INVENTORY MANAGEMENT

                  The Smart Forecaster

                   Pursuing best practices in demand planning,

                  forecasting and inventory optimization

                  Improve Forecast Accuracy, Eliminate Excess Inventory, & Maximize Service Levels

                  In this Video Dr. Thomas Willemain, co–Founder and SVP Research, talks about forecast-based inventory management policy, also known as MRP logic. This is the fourth in our series on major approaches to managing inventory.  We begin by looking at some very simple and then more robust models of inventory dynamics that help us determine how much to order or manufacture and when. We then consider how to calculate lead time and account for lead time variability. Tom concludes by describing the importance of safety stock, it’s role in properly buffering against demand and supply uncertainty, and how best to calculate it. 

                   

                  Leave a Comment

                  RECENT POSTS

                  The Importance of Clear Service Level Definitions in Inventory Management

                  The Importance of Clear Service Level Definitions in Inventory Management

                  Inventory optimization software that supports what-if analysis will expose the tradeoff of stockouts vs. excess costs of varying service level targets. But first it is important to identify how “service levels” is interpreted, measured, and reported. This will avoid miscommunication and the false sense of security that can develop when less stringent definitions are used. Clearly defining how service level is calculated puts all stakeholders on the same page. This facilitates better decision-making.

                  The Cost of Spreadsheet Planning

                  The Cost of Spreadsheet Planning

                  Companies that depend on spreadsheets for demand planning, forecasting, and inventory management are often constrained by the spreadsheet’s inherent limitations. This post examines the drawbacks of traditional inventory management approaches caused by spreadsheets and their associated costs, contrasting these with the significant benefits gained from embracing state-of-the-art planning technologies.

                  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.

                  Recent Posts

                  • The Importance of Clear Service Level Definitions in Inventory ManagementThe Importance of Clear Service Level Definitions in Inventory Management
                    Inventory optimization software that supports what-if analysis will expose the tradeoff of stockouts vs. excess costs of varying service level targets. But first it is important to identify how “service levels” is interpreted, measured, and reported. This will avoid miscommunication and the false sense of security that can develop when less stringent definitions are used. Clearly defining how service level is calculated puts all stakeholders on the same page. This facilitates better decision-making. […]
                  • Future-Proofing Utilities. Advanced Analytics for Supply Chain OptimizationFuture-Proofing Utilities: Advanced Analytics for Supply Chain Optimization
                    Utilities in the electrical, natural gas, urban water, and telecommunications fields are all asset-intensive and reliant on physical infrastructure that must be properly maintained, updated, and upgraded over time. Maximizing asset uptime and the reliability of physical infrastructure demands effective inventory management, spare parts forecasting, and supplier management. A utility that executes these processes effectively will outperform its peers, provide better returns for its investors and higher service levels for its customers, while reducing its environmental impact. […]
                  • The Cost of Doing nothing with your inventory Planning SystemsThe Cost of Spreadsheet Planning
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                  • Simple Inventory Optimization is Good Except When It Isn’t FHDSimple is Good, Except When It Isn’t
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                  • Leveraging Epicor Kinetic Planning BOMs with Smart IP&O to Forecast Accurately HDLeveraging Epicor Kinetic Planning BOMs with Smart IP&O to Forecast Accurately
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                    • Future-Proofing Utilities. Advanced Analytics for Supply Chain OptimizationFuture-Proofing Utilities: Advanced Analytics for Supply Chain Optimization
                      Utilities in the electrical, natural gas, urban water, and telecommunications fields are all asset-intensive and reliant on physical infrastructure that must be properly maintained, updated, and upgraded over time. Maximizing asset uptime and the reliability of physical infrastructure demands effective inventory management, spare parts forecasting, and supplier management. A utility that executes these processes effectively will outperform its peers, provide better returns for its investors and higher service levels for its customers, while reducing its environmental impact. […]
                    • Centering Act Spare Parts Timing Pricing and ReliabilityCentering Act: Spare Parts Timing, Pricing, and Reliability
                      In this article, we'll walk you through the process of crafting a spare parts inventory plan that prioritizes availability metrics such as service levels and fill rates while ensuring cost efficiency. We'll focus on an approach to inventory planning called Service Level-Driven Inventory Optimization. Next, we'll discuss how to determine what parts you should include in your inventory and those that might not be necessary. Lastly, we'll explore ways to enhance your service-level-driven inventory plan consistently. […]
                    • 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. […]