Tag Archive for: Demand Forecasting

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3 Tricks to Fix the Bullwhip Effect and Smooth Inventory Replenishment

A Bullwhip Effect Creates Waves of Inventory Issues

Demand forecasting can eliminate a lot of your “wave riding” activities in supply chain planning. Your company invests significant resources, time and money, in planning and executing inventory replenishment and promotional events. You often experience service problems when your suppliers don’t have inventory in place to support your business. The suppliers operate their supply chain independent of yours and forecast demand from your purchase orders. This sales forecasting approach has a silo effect on information; your partners don’t get an accurate view of the end consumer’s demand. When do suppliers see order quantities changing, up or down; how do they interpret the signal? Sometimes they view changes as trends or lumpy demand and react by changing their production or inventory plans. This results in a wave of over-reaction called the “bullwhip effect.”
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Demand Forecasting: The Ultimate Secret for Your Organization’s Success

“I am like any other man. All I do is supply a demand.” – Al Capone

Al Capone understood very well that the secret to making money was simply giving people what they want. That’s it.  Demand Forecasting is all about that one simple thing – figuring out what your customers want so that you will have product in place to fulfill their demands: the right products in the right place at the right time.
For Capone, this was a task made easy by Prohibition, which eliminated an end to end supply chain: the legitimate producers, wholesale distributors, and retail sellers of alcohol. They all went away and created a large scarcity of product. There was a serious supply void for the end consumer’s demand, one that Capone’s organization was more than happy to fill.
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Changes in Demand Forecasting and Inventory Replenishment Methods: Top 5 Blogs of 2013

Demand Driven Inventory Management: Your Target in 2014

Demand Forecasting and Inventory Replenishment Methods were the top stories (blogs) downloaded and reviewed in 2013. Based on the number of readers and average time spent on a page (3min), these 5 stories stayed in front all year long. These stories are good indicators of where companies like yours see their opportunity to use better methodologies and new technology for higher supply chain profits in 2014.

Change is Good. Do You Know the Right Questions?

The marketplace changes faster today than anyone could have predicted 5 years ago. While many supply chain analysts have touted the need to be demand driven, the facts show that most retail, wholesale, and grocery businesses have done little to improve their processes. The good news is today hardware can run 3-5X faster than 5 years ago at 1/2 the cost. The bad news is that software systems cannot just be ‘upgraded’ to make use of the new hardware, forcing business to accept 3rd rate results or outlay large amounts of cash to write new software. Software companies have made it very difficult for buyers to understand what is old technology with a new wrapper and what is really new software technology. The following top stories of 2013 highlight the right questions to ask, why the questions are important and the answers you should expect.

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The Little 2013 Holiday Demand Forecasting Mistake that Cost Thousands

Holiday sales kicked off to the slowest start since 2008 according to many reports. The lack of sales and margin is highlighting the bigger issue facing retail/ wholesale companies: old supply chain technologies and processes that no longer fit the customer demand buying patterns. The result of poor supply chain software and process is excess inventory. Your inventory has financial carrying cost and operational cost that together devour your company’s profits. Your excess inventory will lead to markdowns that lower gross margin and further decay your company’s profits. Maybe you are making the same little mistake that has driven others out of business…
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Great Sales Forecasting Equals Out of Stock

Sales Forecasting is a measure of the market response; it is not a measure of market demand. However, the problem with this is that simple; the most accurate sales forecast is only a measure of market response to what is available. This is not accurate when considering future market demand. Issues with constrained supply, service levels, price, and promotion are not analyzed correctly.  Yet, this is why sales forecasting is responsible for out-of-stock and overstock in many companies.
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Four Common Inventory Issues – Which Do You Want To Fix?

You experience inventory issues on a regular basis – Out of Stocks, Overstocks, Bumpy Cash Flow, and Lost Sales, happen in your retail business, some weeks have a multitude of these issues at the same time. What is the solution, is there a single answer or at least a solution that solves a large percent of the problems? What about Inventory Optimization?

  • Out of Stocks – Supply Chain Issues
  • Overstocks – Operation Problems
  • Bumpy Cash Flow – Planning & Finance
  • Lost Sales – Customer Service Issues
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Do You Make These Mistakes with Slow Demand Products?

Slow demand products make up 35-40% of most retailer assortments. These products often are critical to the assortment because a top 20% product is often paired with a selection from an assortment of slow demand product choices. This large group of products in your assortment can ruin your turn goals and your GMROI when managed incorrectly. There are two key pieces that must work together for a retailer to win with slow movers: the demand forecast and how the supply chain software uses the demand forecast to manage the inventory. The results of poor buying are low turns and loss of capital for other product.

Slow Demand Product Forecasting Myths

“How do you forecast slow demand products?” The same question was posed to me in three different meetings at NRF this year. Many software companies differentiate their demand forecast capability from their competition by highlighting their skill in forecasting slow product demand; at the same time, they strike fear into the hearts of retailers by highlighting retail losses delivered due to poor demand forecasting of slow moving products. The key to this discussion is to not get trapped into a no win conclusion. More than a great Demand Forecast is needed to attain winning results with these product groups. Like the story of the ‘Tortoise and the Hare’, Slow demand products are part of any assortment and can be big winners.

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You Can Laugh At Holiday Sales Worries–If You Follow This Simple Plan

The dog days of summer may seem too early for retailers to look at their seasonal indexes for holiday season planning; but consider this, 32% of e-commerce sales in 2012 were generated between October and December. Since this is the season that can make or break your results for the year, Omni-Channel Holiday planning can’t start soon enough.  Retailers must prepare their Seasonal Index strategies now to be ready for the most important shopping period, the Holiday Season.

Do Your 2013 Holiday Sales Plans include the Dramatic Fiscal Week Changes?

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Demand Forecasting Seasonal Horror Stories to Dodge

We enjoy watching horror movies, stock car races, and dodge ball here in the south for the same reason, the chance to watch something go wrong. Companies are watching the back to school sales for signs of our economy’s strength and leading indicators for holiday shopping; will something bad happen? This is a good time to review some epic inventory replenishment mistakes made by others in the past. I hope these horror stories help you learn better methods for managing inventory or at least make you say, hey at least we didn’t make that mistake in our demand forecasting and inventory replenishment.

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A little Demand Forecasting Mistake that Cost a Retailer >$250,000

A little Demand forecasting mistake costs retailers and wholesalers significant profits each year. While the mistake seems small, in reality, over one year, the total dollars in lost profits will be significant. How? Demand forecasting impacts your largest asset, your inventory. Also, Demand Forecasting is an integral part of many business processes, poor processes cost you money. While the mistake may sound old and obvious, most businesses do not account for this which provides you an opportunity over your competition.

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