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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        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
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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.

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                    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.

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                    The Supply Chain Blame Game:  Top 3 Excuses for Inventory Shortage and Excess

                    The Supply Chain Blame Game: Top 3 Excuses for Inventory Shortage and Excess

                    The supply chain has become the blame game for almost any industrial or retail problem. Shortages on lead time variability, bad forecasts, and problems with bad data are facts of life, yet inventory-carrying organizations are often caught by surprise when any of these difficulties arise. So, again, who is to blame for the supply chain chaos? Keep reading this blog and we will try to show you how to prevent product shortages and overstocking.

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                    • Mature bearded mechanic in uniform examining the machine and repairing it in factoryService Parts Planning: Planning for consumable parts vs. Repairable Parts
                      When deciding on the right stocking parameters for spare and replacement parts, it is important to distinguish between consumable and repairable servoce parts. These differences are often overlooked by inventory planning software and can result in incorrect estimates of what to stock. Different approaches are required when planning for consumables vs. repairable service parts. […]
                    • Four Common Mistakes when Planning Replenishment TargetsFour Common Mistakes when Planning Replenishment Targets
                      How often do you recalibrate your stocking policies? Why? Learn how to avoid key mistakes when planning replenishment targets by automating the process, recalibrating parts, using targeting forecasting methods, and reviewing exceptions. […]
                    • Smart Software is pleased to introduce our series of webinars, offered exclusively for Epicor Users.Extend Epicor Kinetic’s Forecasting & Min/Max Planning with Smart IP&O
                      Epicor Kinetic can manage replenishment by suggesting what to order and when via reorder point-based inventory policies. The problem is that the ERP system requires that the user either manually specify these reorder points, or use a rudimentary “rule of thumb” approach based on daily averages. In this article, we will review the inventory ordering functionality in Epicor Kinetic, explain its limitations, and summarize how to reduce inventory, and minimize stockouts by providing the robust predictive functionality that is missing in Epicor. […]

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                      • Blanket Orders Smart Software Demand and Inventory Planning HDBlanket Orders
                        Our customers are great teachers who have always helped us bridge the gap between textbook theory and practical application. A prime example happened over twenty years ago, when we were introduced to the phenomenon of intermittent demand, which is common among spare parts but rare among the finished goods managed by our original customers working in sales and marketing. This revelation soon led to our preeminent position as vendors of software for managing inventories of spare parts. Our latest bit of schooling concerns “blanket orders.” […]
                      • Hand placing pieces to build an arrowProbabilistic Forecasting for Intermittent Demand
                        The New Forecasting Technology derives from Probabilistic Forecasting, a statistical method that accurately forecasts both average product demand per period and customer service level inventory requirements. […]
                      • Engineering to Order at Kratos Space – Making Parts Availability a Strategic Advantage
                        The Kratos Space group within National Security technology innovator Kratos Defense & Security Solutions, Inc., produces COTS s software and component products for space communications - Making Parts Availability a Strategic Advantage […]
                      • wooden-figures-of-people-and-a-magnet-team-management-warehouse inventoryManaging the Inventory of Promoted Items
                        In a previous post, I discussed one of the thornier problems demand planners sometimes face: working with product demand data characterized by what statisticians call skewness—a situation that can necessitate costly inventory investments. This sort of problematic data is found in several different scenarios. In at least one, the combination of intermittent demand and very effective sales promotions, the problem lends itself to an effective solution. […]

                          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 Supply Chain Blame Game:  Top 3 Excuses for Inventory Shortage and Excess

                          The Supply Chain Blame Game: Top 3 Excuses for Inventory Shortage and Excess

                          The supply chain has become the blame game for almost any industrial or retail problem. Shortages on lead time variability, bad forecasts, and problems with bad data are facts of life, yet inventory-carrying organizations are often caught by surprise when any of these difficulties arise. So, again, who is to blame for the supply chain chaos? Keep reading this blog and we will try to show you how to prevent product shortages and overstocking.

                          Recent Posts

                          • Epicor Prophet 21 with Forecasting Inventory PlanningExtend Epicor Prophet 21 with Smart IP&O’s Forecasting & Dynamic Reorder Point Planning
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                          • Supply Chain Math large-scale decision-making analyticsSupply Chain Math: Don’t Bring a Knife to a Gunfight
                            Math and the supply chain go hand and hand. As supply chains grow, increasing complexity will drive companies to look for ways to manage large-scale decision-making. Math is a fact of life for anyone in inventory management and demand forecasting who is hoping to remain competitive in the modern world. Read our article to learn more. […]
                          • Mature bearded mechanic in uniform examining the machine and repairing it in factoryService Parts Planning: Planning for consumable parts vs. Repairable Parts
                            When deciding on the right stocking parameters for spare and replacement parts, it is important to distinguish between consumable and repairable servoce parts. These differences are often overlooked by inventory planning software and can result in incorrect estimates of what to stock. Different approaches are required when planning for consumables vs. repairable service parts. […]
                          • Four Common Mistakes when Planning Replenishment TargetsFour Common Mistakes when Planning Replenishment Targets
                            How often do you recalibrate your stocking policies? Why? Learn how to avoid key mistakes when planning replenishment targets by automating the process, recalibrating parts, using targeting forecasting methods, and reviewing exceptions. […]
                          • Smart Software is pleased to introduce our series of webinars, offered exclusively for Epicor Users.Extend Epicor Kinetic’s Forecasting & Min/Max Planning with Smart IP&O
                            Epicor Kinetic can manage replenishment by suggesting what to order and when via reorder point-based inventory policies. The problem is that the ERP system requires that the user either manually specify these reorder points, or use a rudimentary “rule of thumb” approach based on daily averages. In this article, we will review the inventory ordering functionality in Epicor Kinetic, explain its limitations, and summarize how to reduce inventory, and minimize stockouts by providing the robust predictive functionality that is missing in Epicor. […]

                            Inventory Optimization for Manufacturers, Distributors, and MRO

                            • Blanket Orders Smart Software Demand and Inventory Planning HDBlanket Orders
                              Our customers are great teachers who have always helped us bridge the gap between textbook theory and practical application. A prime example happened over twenty years ago, when we were introduced to the phenomenon of intermittent demand, which is common among spare parts but rare among the finished goods managed by our original customers working in sales and marketing. This revelation soon led to our preeminent position as vendors of software for managing inventories of spare parts. Our latest bit of schooling concerns “blanket orders.” […]
                            • Hand placing pieces to build an arrowProbabilistic Forecasting for Intermittent Demand
                              The New Forecasting Technology derives from Probabilistic Forecasting, a statistical method that accurately forecasts both average product demand per period and customer service level inventory requirements. […]
                            • Engineering to Order at Kratos Space – Making Parts Availability a Strategic Advantage
                              The Kratos Space group within National Security technology innovator Kratos Defense & Security Solutions, Inc., produces COTS s software and component products for space communications - Making Parts Availability a Strategic Advantage […]
                            • wooden-figures-of-people-and-a-magnet-team-management-warehouse inventoryManaging the Inventory of Promoted Items
                              In a previous post, I discussed one of the thornier problems demand planners sometimes face: working with product demand data characterized by what statisticians call skewness—a situation that can necessitate costly inventory investments. This sort of problematic data is found in several different scenarios. In at least one, the combination of intermittent demand and very effective sales promotions, the problem lends itself to an effective solution. […]