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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
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RECENT POSTS

Why Inventory Planning Shouldn’t Rely Exclusively on Simple Rules of Thumb

Why Inventory Planning Shouldn’t Rely Exclusively on Simple Rules of Thumb

For too many companies, a critical piece of data fact-finding ― the measurement of demand uncertainty ― is handled by simple but inaccurate rules of thumb. For example, demand planners will often compute safety stock by a user-defined multiple of the forecast or historical average. Or they may configure their ERP to order more when on hand inventory gets to 2 x the average demand over the lead time for important items and 1.5 x for less important ones. This is a huge mistake with costly consequences.

Direct to the Brain of the Boss – Inventory Analytics and Reporting

Direct to the Brain of the Boss – Inventory Analytics and Reporting

In this blog, the spotlight is cast on the software that creates reports for management, the silent hero that translates the beauty of furious calculations into actionable reports. Watch as the calculations, intricately guided by planners utilizing our software, seamlessly converge into Smart Operational Analytics (SOA) reports, dividing five key areas: inventory analysis, inventory performance, inventory trending, supplier performance, and demand anomalies.

You Need to Team up with the Algorithms

You Need to Team up with the Algorithms

This article is about the real power that comes from the collaboration between you and our software that happens at your fingertips. We often write about the software itself and what goes on “under the hood”. This time, the subject is how you should best team up with the software.

Recent Posts

  • Why inventory planning shouldn’t rely exclusively on simple rules of thumbWhy Inventory Planning Shouldn’t Rely Exclusively on Simple Rules of Thumb
    For too many companies, a critical piece of data fact-finding ― the measurement of demand uncertainty ― is handled by simple but inaccurate rules of thumb. For example, demand planners will often compute safety stock by a user-defined multiple of the forecast or historical average. Or they may configure their ERP to order more when on hand inventory gets to 2 x the average demand over the lead time for important items and 1.5 x for less important ones. This is a huge mistake with costly consequences. […]
  • Direct to the Brain of the Boss- Inventory AnalysisDirect to the Brain of the Boss – Inventory Analytics and Reporting
    In this blog, the spotlight is cast on the software that creates reports for management, the silent hero that translates the beauty of furious calculations into actionable reports. Watch as the calculations, intricately guided by planners utilizing our software, seamlessly converge into Smart Operational Analytics (SOA) reports, dividing five key areas: inventory analysis, inventory performance, inventory trending, supplier performance, and demand anomalies. […]
  • You need to team up with the algorithms for Inventory ManagementYou Need to Team up with the Algorithms
    This article is about the real power that comes from the collaboration between you and our software that happens at your fingertips. We often write about the software itself and what goes on “under the hood”. This time, the subject is how you should best team up with the software. […]
  • Rethinking forecast accuracy, A shift from accuracy to error metricsRethinking forecast accuracy: A shift from accuracy to error metrics
    Measuring the accuracy of forecasts is an undeniably important part of the demand planning process. This forecasting scorecard could be built based on one of two contrasting viewpoints for computing metrics. The error viewpoint asks, “how far was the forecast from the actual?” The accuracy viewpoint asks, “how close was the forecast to the actual?” Both are valid, but error metrics provide more information. […]
  • Using Key Performance Predictions to Plan Stocking Policies
    I can't imagine being an inventory planner in spare parts, distribution, or manufacturing and having to create safety stock levels, reorder points, and order suggestions without using key performance predictions of service levels, fill rates, and inventory costs. […]

    Inventory Optimization for Manufacturers, Distributors, and MRO

    • 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. […]
    • 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. […]
    • 5 Steps to Improve the Financial Impact of Spare Parts Planning5 Steps to Improve the Financial Impact of Spare Parts Planning
      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. […]
    • Bottom Line strategies for Spare Parts Planning SoftwareBottom Line Strategies for Spare Parts Planning
      Managing spare parts presents numerous challenges, such as unexpected breakdowns, changing schedules, and inconsistent demand patterns. Traditional forecasting methods and manual approaches are ineffective in dealing with these complexities. To overcome these challenges, this blog outlines key strategies that prioritize service levels, utilize probabilistic methods to calculate reorder points, regularly adjust stocking policies, and implement a dedicated planning process to avoid excessive inventory. Explore these strategies to optimize spare parts inventory and improve operational efficiency. […]

      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

      Why Inventory Planning Shouldn’t Rely Exclusively on Simple Rules of Thumb

      Why Inventory Planning Shouldn’t Rely Exclusively on Simple Rules of Thumb

      For too many companies, a critical piece of data fact-finding ― the measurement of demand uncertainty ― is handled by simple but inaccurate rules of thumb. For example, demand planners will often compute safety stock by a user-defined multiple of the forecast or historical average. Or they may configure their ERP to order more when on hand inventory gets to 2 x the average demand over the lead time for important items and 1.5 x for less important ones. This is a huge mistake with costly consequences.

      Direct to the Brain of the Boss – Inventory Analytics and Reporting

      Direct to the Brain of the Boss – Inventory Analytics and Reporting

      In this blog, the spotlight is cast on the software that creates reports for management, the silent hero that translates the beauty of furious calculations into actionable reports. Watch as the calculations, intricately guided by planners utilizing our software, seamlessly converge into Smart Operational Analytics (SOA) reports, dividing five key areas: inventory analysis, inventory performance, inventory trending, supplier performance, and demand anomalies.

      You Need to Team up with the Algorithms

      You Need to Team up with the Algorithms

      This article is about the real power that comes from the collaboration between you and our software that happens at your fingertips. We often write about the software itself and what goes on “under the hood”. This time, the subject is how you should best team up with the software.

      Recent Posts

      • Why inventory planning shouldn’t rely exclusively on simple rules of thumbWhy Inventory Planning Shouldn’t Rely Exclusively on Simple Rules of Thumb
        For too many companies, a critical piece of data fact-finding ― the measurement of demand uncertainty ― is handled by simple but inaccurate rules of thumb. For example, demand planners will often compute safety stock by a user-defined multiple of the forecast or historical average. Or they may configure their ERP to order more when on hand inventory gets to 2 x the average demand over the lead time for important items and 1.5 x for less important ones. This is a huge mistake with costly consequences. […]
      • Direct to the Brain of the Boss- Inventory AnalysisDirect to the Brain of the Boss – Inventory Analytics and Reporting
        In this blog, the spotlight is cast on the software that creates reports for management, the silent hero that translates the beauty of furious calculations into actionable reports. Watch as the calculations, intricately guided by planners utilizing our software, seamlessly converge into Smart Operational Analytics (SOA) reports, dividing five key areas: inventory analysis, inventory performance, inventory trending, supplier performance, and demand anomalies. […]
      • You need to team up with the algorithms for Inventory ManagementYou Need to Team up with the Algorithms
        This article is about the real power that comes from the collaboration between you and our software that happens at your fingertips. We often write about the software itself and what goes on “under the hood”. This time, the subject is how you should best team up with the software. […]
      • Rethinking forecast accuracy, A shift from accuracy to error metricsRethinking forecast accuracy: A shift from accuracy to error metrics
        Measuring the accuracy of forecasts is an undeniably important part of the demand planning process. This forecasting scorecard could be built based on one of two contrasting viewpoints for computing metrics. The error viewpoint asks, “how far was the forecast from the actual?” The accuracy viewpoint asks, “how close was the forecast to the actual?” Both are valid, but error metrics provide more information. […]
      • Using Key Performance Predictions to Plan Stocking Policies
        I can't imagine being an inventory planner in spare parts, distribution, or manufacturing and having to create safety stock levels, reorder points, and order suggestions without using key performance predictions of service levels, fill rates, and inventory costs. […]

        Inventory Optimization for Manufacturers, Distributors, and MRO

        • 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. […]
        • 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. […]
        • 5 Steps to Improve the Financial Impact of Spare Parts Planning5 Steps to Improve the Financial Impact of Spare Parts Planning
          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. […]
        • Bottom Line strategies for Spare Parts Planning SoftwareBottom Line Strategies for Spare Parts Planning
          Managing spare parts presents numerous challenges, such as unexpected breakdowns, changing schedules, and inconsistent demand patterns. Traditional forecasting methods and manual approaches are ineffective in dealing with these complexities. To overcome these challenges, this blog outlines key strategies that prioritize service levels, utilize probabilistic methods to calculate reorder points, regularly adjust stocking policies, and implement a dedicated planning process to avoid excessive inventory. Explore these strategies to optimize spare parts inventory and improve operational efficiency. […]

          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

          RECENT POSTS

          Why Inventory Planning Shouldn’t Rely Exclusively on Simple Rules of Thumb

          Why Inventory Planning Shouldn’t Rely Exclusively on Simple Rules of Thumb

          For too many companies, a critical piece of data fact-finding ― the measurement of demand uncertainty ― is handled by simple but inaccurate rules of thumb. For example, demand planners will often compute safety stock by a user-defined multiple of the forecast or historical average. Or they may configure their ERP to order more when on hand inventory gets to 2 x the average demand over the lead time for important items and 1.5 x for less important ones. This is a huge mistake with costly consequences.

          Direct to the Brain of the Boss – Inventory Analytics and Reporting

          Direct to the Brain of the Boss – Inventory Analytics and Reporting

          In this blog, the spotlight is cast on the software that creates reports for management, the silent hero that translates the beauty of furious calculations into actionable reports. Watch as the calculations, intricately guided by planners utilizing our software, seamlessly converge into Smart Operational Analytics (SOA) reports, dividing five key areas: inventory analysis, inventory performance, inventory trending, supplier performance, and demand anomalies.

          You Need to Team up with the Algorithms

          You Need to Team up with the Algorithms

          This article is about the real power that comes from the collaboration between you and our software that happens at your fingertips. We often write about the software itself and what goes on “under the hood”. This time, the subject is how you should best team up with the software.

          Recent Posts

          • Why inventory planning shouldn’t rely exclusively on simple rules of thumbWhy Inventory Planning Shouldn’t Rely Exclusively on Simple Rules of Thumb
            For too many companies, a critical piece of data fact-finding ― the measurement of demand uncertainty ― is handled by simple but inaccurate rules of thumb. For example, demand planners will often compute safety stock by a user-defined multiple of the forecast or historical average. Or they may configure their ERP to order more when on hand inventory gets to 2 x the average demand over the lead time for important items and 1.5 x for less important ones. This is a huge mistake with costly consequences. […]
          • Direct to the Brain of the Boss- Inventory AnalysisDirect to the Brain of the Boss – Inventory Analytics and Reporting
            In this blog, the spotlight is cast on the software that creates reports for management, the silent hero that translates the beauty of furious calculations into actionable reports. Watch as the calculations, intricately guided by planners utilizing our software, seamlessly converge into Smart Operational Analytics (SOA) reports, dividing five key areas: inventory analysis, inventory performance, inventory trending, supplier performance, and demand anomalies. […]
          • You need to team up with the algorithms for Inventory ManagementYou Need to Team up with the Algorithms
            This article is about the real power that comes from the collaboration between you and our software that happens at your fingertips. We often write about the software itself and what goes on “under the hood”. This time, the subject is how you should best team up with the software. […]
          • Rethinking forecast accuracy, A shift from accuracy to error metricsRethinking forecast accuracy: A shift from accuracy to error metrics
            Measuring the accuracy of forecasts is an undeniably important part of the demand planning process. This forecasting scorecard could be built based on one of two contrasting viewpoints for computing metrics. The error viewpoint asks, “how far was the forecast from the actual?” The accuracy viewpoint asks, “how close was the forecast to the actual?” Both are valid, but error metrics provide more information. […]
          • Using Key Performance Predictions to Plan Stocking Policies
            I can't imagine being an inventory planner in spare parts, distribution, or manufacturing and having to create safety stock levels, reorder points, and order suggestions without using key performance predictions of service levels, fill rates, and inventory costs. […]

            Inventory Optimization for Manufacturers, Distributors, and MRO

            • 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. […]
            • 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. […]
            • 5 Steps to Improve the Financial Impact of Spare Parts Planning5 Steps to Improve the Financial Impact of Spare Parts Planning
              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. […]
            • Bottom Line strategies for Spare Parts Planning SoftwareBottom Line Strategies for Spare Parts Planning
              Managing spare parts presents numerous challenges, such as unexpected breakdowns, changing schedules, and inconsistent demand patterns. Traditional forecasting methods and manual approaches are ineffective in dealing with these complexities. To overcome these challenges, this blog outlines key strategies that prioritize service levels, utilize probabilistic methods to calculate reorder points, regularly adjust stocking policies, and implement a dedicated planning process to avoid excessive inventory. Explore these strategies to optimize spare parts inventory and improve operational efficiency. […]