You know the phrase “marching to the beat of a different drummer” is a way of saying someone isn’t following the status quo and is standing out from the crowd. It’s generally not a positive statement. We disagree wholeheartedly. Continue reading
You know WHY reducing forecast error is important – accuracy is directly linked to corporate profitability. But how do you know WHEN you should look into new forecasting technology? After listening to our customers and numerous conversations with CPG, distribution and manufacturing companies, here are 6 Indicators it’s time to look at new demand forecasting software:
While 50/50 odds are great in Vegas, they are poor for critical business decisions. Imagine standing before a room of shareholders and telling them they have a 50% chance of making money. Forecast error of this caliber can be especially hard to swallow if monies have been spent on solutions that haven’t performed or lived up to expectations. Either way you spin it “throwing darts at a dartboard” or failing to forecast at all is a direct shirking of your fiduciary responsibility.
*Or even 10% error since once you get down to the execution-level accuracy is drastically diminished.
In the days of “Plan Source Make Deliver” information was siloed and unidirectional. However, now that technology accurately portrays supply chain complexity, the data you’re collecting adds up fast. It isn’t uncommon for POS, market information, etc., to sit in a database never utilized. You spent time and energy enabling systems that could collect it so you should use it. For as great as they once served your organization, the homegrown tools developed by Excel whizzes and data jockeys over the years can only do so much. There comes a point when the hours spent forcing the system to work aren’t worth the performance. Are you at that point?
With these buzzwords flying around conferences and research documents you can expect that this will be request from your customers sooner rather than later. Your customers have customers and they want to have the best data available to know what’s coming down the pipe to set expectations. The benefits here are twofold. Laying the foundation for collaboration and investing in enabling technologies now will set you up for success when the time comes to execute.
According to a Gartner study, “better demand forecasters have 15% lower inventory.” Now is the time to get ahead being that Accenture found that companies who employ predictive analytics hold 50% less finished goods inventory than their competitors. These numbers speak for themselves. Inventory is the biggest and least productive asset on the balance sheet so accurately forecasting will make you your CFOs favorite colleague.
They are becoming leaner, meaner and more agile. While you’re waiting for a spreadsheet to be updated and passed around between sales, production and finance – they are receiving alerts and have real-time data to make faster, better decisions. It’s a commoditized world and your customers have options. With the rate at which information flows it’s won’t be long before they hear from a colleague how much better they’re serviced by the other guys.
Be good at your job. Scratch that. Be GREAT at your job. If you own the forecast your compensation metrics are more than likely tied to accuracy. You’re going to have to be passionate about pursuing new technology for forecast as you will be asked to be the “champion” through the selection process. But when your personal finances are in the mix taking on the burden will be well worth your while.
We’d love to hear your thoughts. What are the reasons that get you thinking about new forecasting technology?
Carmel, IN – (February 7, 2012) -Audiovox Bringing Bongiovi Sound to Cars
Audiovox has been demand planning and forecasting with Demand Foresight since 2007. Through the partnership they reduced inventory by $10M by improving accuracy at distant horizons and looking at more than one distribution center at a time.
Fort Collins, CO – (January 31, 2012) - Dig is the new spring seasonal beer and it’s really good!
New Belgium Brewing uses demand planning and forecasting solutions to plan new product releases. Through accurate forecasting New Belgium maintains high customer service rates in the face of rapid growth.
Rewind to just a few days ago – January 19, 2012. “Housing Starts Rise 4.4%,” reported National Mortgage Professional magazine. Meanwhile, Bloomberg takes a different stance reporting “U.S. Housing Starts Drop 4.1%, Worse Than Forecast.“ When you dig deeper into the articles you’ll find each of sources were actually reporting on the same data but with the sensationalist headline most appealing to their readers.
Depending on whether your company and team operates with a bullish or bearish outlook, the changes made to your forecast based on information such as the above might do more damage than good. Just as the authors of these articles did, everyone from supply chain analysts all the way up the the executive team can put very differing spins on the same numbers. Yet despite the many ways of interpreting the data there can only be one numerical outcome.
If not housing starts, which is the market data that impacts your forecast? From where are you gathering it? How are you integrating these externalities to improve your forecast?
Is it delivering results?
For New Belgium Brewing, Demand Foresight imported unemployment statistics. For Evenflo, it was birth rates. Realizing they weren’t operating in a vacuum and integrating market information these companies made production profitable and edged the competition by saving in saved themselves costs still being incurred by their competitors.
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