Why pick arbitrary Service Level Targets?

The Smart Forecaster

Pursuing best practices in demand planning,

forecasting and inventory optimization

Why pick arbitrary Service Level Targets? Learn how to select automatically the optimal Targets @scale minimizing total costs for your business.

There are unavoidable tradeoffs between inventory cost and item availability. The Smart Inventory Optimization (SIO) app calculates all the key metrics to expose those tradeoffs. You can try “what-if” experiments such as “What happens to shortage cost if we raise the reorder point from 5 to 10?”. Better yet, you can let SIO find the optimal operating policy, e.g., the lowest cost combination of reorder point and order quantity that guarantees a 95% service level.

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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.

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In this Videoblog, we will explain how time series forecasting has emerged as a pivotal tool, particularly at the daily level, which Smart Software has been pioneering since its inception over forty years ago. The evolution of business practices from annual to more refined temporal increments like monthly and now daily data analysis illustrates a significant shift in operational strategies.

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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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  • Daily Demand Scenarios Smart 2Daily Demand Scenarios
    In this Videoblog, we will explain how time series forecasting has emerged as a pivotal tool, particularly at the daily level, which Smart Software has been pioneering since its inception over forty years ago. The evolution of business practices from annual to more refined temporal increments like monthly and now daily data analysis illustrates a significant shift in operational strategies. […]
  • The Cost of Doing nothing with your inventory Planning SystemsThe Cost of Spreadsheet Planning
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    Demand planning and statistical forecasting software play a pivotal role in effective business management by incorporating features that significantly enhance forecasting accuracy. One key aspect involves the utilization of smoothing-based or extrapolative models, enabling businesses to quickly make predictions based solely on historical data. This foundation rooted in past performance is crucial for understanding trends and patterns, especially in variables like sales or product demand. Forecasting software goes beyond mere data analysis by allowing the blending of professional judgment with statistical forecasts, recognizing that forecasting is not a one-size-fits-all process. This flexibility enables businesses to incorporate human insights and industry knowledge into the forecasting model, ensuring a more nuanced and accurate prediction. […]

    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
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    • Whyt MRO Businesses Should Care about Excess InventoryWhy MRO Businesses Should Care About Excess Inventory
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    • 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
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      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.

       

       

      Leave a Comment

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      Overcoming Uncertainty with Service and Inventory Optimization Technology

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      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.

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      In this Videoblog, we will explain how time series forecasting has emerged as a pivotal tool, particularly at the daily level, which Smart Software has been pioneering since its inception over forty years ago. The evolution of business practices from annual to more refined temporal increments like monthly and now daily data analysis illustrates a significant shift in operational strategies.

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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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      • Daily Demand Scenarios Smart 2Daily Demand Scenarios
        In this Videoblog, we will explain how time series forecasting has emerged as a pivotal tool, particularly at the daily level, which Smart Software has been pioneering since its inception over forty years ago. The evolution of business practices from annual to more refined temporal increments like monthly and now daily data analysis illustrates a significant shift in operational strategies. […]
      • The Cost of Doing nothing with your inventory Planning SystemsThe 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. […]
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        In this video blog, the spotlight is on a critical aspect of inventory management: the analysis and interpretation of inventory data. The focus is specifically on a dataset from a public transit agency detailing spare parts for buses. […]
      • The methods of forecasting SoftwareThe Methods of Forecasting
        Demand planning and statistical forecasting software play a pivotal role in effective business management by incorporating features that significantly enhance forecasting accuracy. One key aspect involves the utilization of smoothing-based or extrapolative models, enabling businesses to quickly make predictions based solely on historical data. This foundation rooted in past performance is crucial for understanding trends and patterns, especially in variables like sales or product demand. Forecasting software goes beyond mere data analysis by allowing the blending of professional judgment with statistical forecasts, recognizing that forecasting is not a one-size-fits-all process. This flexibility enables businesses to incorporate human insights and industry knowledge into the forecasting model, ensuring a more nuanced and accurate prediction. […]

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          Automatic Forecasting for Time Series Demand Projections

          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 tutorial Dr. Thomas Willemain, co–Founder and SVP Research at Smart Software, presents Automatic Forecasting for Time Series Demand Projections, a specialized algorithmic tournament to determine an appropriate time series model and estimate the parameters to compute the best forecasts methods. Automatic forecasts of large numbers of time series are frequently used in business, some have trend either up or down, and some have seasonality so they are cyclic, and each of those specific patterns requires a suitable technical approach, and an appropriate statistical forecasting method.  Tom explains how the tournament computes the best forecasts methods and works through a practical example.

          AUTOMATIC FORECASTING COMPLETE-VIDEO-2
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          Overcoming Uncertainty with Service and Inventory Optimization Technology

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          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.

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          In this Videoblog, we will explain how time series forecasting has emerged as a pivotal tool, particularly at the daily level, which Smart Software has been pioneering since its inception over forty years ago. The evolution of business practices from annual to more refined temporal increments like monthly and now daily data analysis illustrates a significant shift in operational strategies.

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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. […]
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            • 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
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              Forecast Using Leading Indicators – Regression Analysis:

              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 tutorial Dr. Thomas Willemain, co–Founder and SVP Research at Smart Software, presents Regression Analysis, a specialized statistical modeling technique to identify and harness leading indicators to achieve more accurate forecasts.  Regression analysis is a statistical procedure to estimate the relationship between a response variable and one or more predictor variables. Housing starts, for example, might be a good leading indicator of vinyl siding demand.  Tom explains how and when to use regression analysis and works through a practical example.

              Forecasting Techniques for a more profitable business
              Leave a Comment

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              Overcoming Uncertainty with Service and Inventory Optimization Technology

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                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
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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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                • Whyt MRO Businesses Should Care about Excess InventoryWhy MRO Businesses Should Care About Excess Inventory
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                • 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. […]

                  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

                  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.

                  Daily Demand Scenarios

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                  In this Videoblog, we will explain how time series forecasting has emerged as a pivotal tool, particularly at the daily level, which Smart Software has been pioneering since its inception over forty years ago. The evolution of business practices from annual to more refined temporal increments like monthly and now daily data analysis illustrates a significant shift in operational strategies.

                  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.

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                  • Daily Demand Scenarios Smart 2Daily Demand Scenarios
                    In this Videoblog, we will explain how time series forecasting has emerged as a pivotal tool, particularly at the daily level, which Smart Software has been pioneering since its inception over forty years ago. The evolution of business practices from annual to more refined temporal increments like monthly and now daily data analysis illustrates a significant shift in operational strategies. […]
                  • The Cost of Doing nothing with your inventory Planning SystemsThe 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. […]
                  • Learning from Inventory Models Software AILearning from Inventory Models
                    In this video blog, the spotlight is on a critical aspect of inventory management: the analysis and interpretation of inventory data. The focus is specifically on a dataset from a public transit agency detailing spare parts for buses. […]
                  • The methods of forecasting SoftwareThe Methods of Forecasting
                    Demand planning and statistical forecasting software play a pivotal role in effective business management by incorporating features that significantly enhance forecasting accuracy. One key aspect involves the utilization of smoothing-based or extrapolative models, enabling businesses to quickly make predictions based solely on historical data. This foundation rooted in past performance is crucial for understanding trends and patterns, especially in variables like sales or product demand. Forecasting software goes beyond mere data analysis by allowing the blending of professional judgment with statistical forecasts, recognizing that forecasting is not a one-size-fits-all process. This flexibility enables businesses to incorporate human insights and industry knowledge into the forecasting model, ensuring a more nuanced and accurate prediction. […]

                    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. […]