Global manufacturers, from $200M+, face extraordinary risk without a firm control of effective inventory management. Supply chain professionals working with purchasing and procurement managers wrestle with practical daily aspects of inventory management, from determining optimal inventory levels, to selecting the best storage locations, to ensuring inventory accuracy.

Forecast Errors
Volume 2, Issue 23, June 15, 2015

A forecast error is the difference between the actual and predicted value. The consequences are expensive inefficiencies that can be resolved with lean manufacturing technology.

Do Your Forecasts Hurt As Much as Help?

At the heart of supply chain visibility is a clear understanding of customer demand. Unfortunately, many manufacturers rely on frequently changing sales forecasts as the primary means for tracking customer demand. Such forecasts typically err on the side of optimism and create excess-inventory situations. As those forecasts become more realistic, customers frequently delay, cancel, or make changes, which can result in shuttering production lines, running expensive overtime operations, absorbing the cost of excess inventory and suffering penalties due to changes in shipping plans. Get everyone on the same page with true visibility. Read more.

Forecast Errors
Volume 2, Issue 22, June 8, 2015

A forecast error is the difference between the actual and predicted value. The consequences are expensive inefficiencies that can be resolved with lean manufacturing technology.

Kanban Better Choice for Projects than Scrum

Neil A. Chaudhuri recently suggested why Kanban may be a better choice for projects than Scrum.  Scrum is a process. Kanban is more of a metaprocess, asserting key principle without prescribing how to accomplish them. There is nothing about sprints, Product Owners, formal planning meetings or any of the ceremony associated with Scrum. Based on the lean manufacturing model espoused by the “Toyota Way,” Kanban is in a way a superset of Scrum.  The ability to visualize work in an explicit way is vital.  Kanban demonstrates unequivocally where everything is in workflow. It also reveals potential bottlenecks where manufacturers may apply the Theory of Constraints. Establishing pull systems using Kanban as the core underlying methodology, has been critical to the movement toward lean manufacturing processes during the past few decades. Read more.

Forecast Errors
Volume 2, Issue 20, May 18, 2015

A forecast error is the difference between the actual and predicted value. The consequences are expensive inefficiencies that can be resolved with lean manufacturing technology.

Demand Forecasting to Eliminate Errors

Today, by using demand forecasting software, manufacturing companies can plan long lead items without flooding production operations with unnecessary inventory. Companies working closely with key customers and the sales force are gaining insight into potential demand, in addition to working with demand sensing techniques, resulting in data and shared repositories with information about the status of inventory at key suppliers (or even the entire supply chain). Read more.

Forecast Errors
Volume 2, Issue 19, May 11, 2015

A forecast error is the difference between the actual and predicted value. The consequences are expensive inefficiencies that can be resolved with lean manufacturing technology.

Too Much Inventory is Costly

Manufacturers and distributors are frequently nervous about running out of stock, and tempted to overstock.  Holding excess stock is not a lean practice and highly inefficient. Start with a decent projection of sales and tracking software to help calculate the rate of product turnover. This helps manage inventory risk and reduce overstocking. Forecast errors can be avoided by monitoring real-time inventory data. Read more.

Forecast Errors
Volume 2, Issue 10, March 9, 2015

A forecast error is the difference between the actual and predicted value. The consequences are expensive inefficiencies that can be resolved with lean manufacturing technology.

Emerson Reduces Forecast Errors with Collaborative Supply Chain Portal

Emerson is a large corporation that deals in many areas of business. The company provides other businesses with technology, software, and advice in many areas as well as providing household consumers with appliance products for their home. Given that Emerson supplies other organizations, they are embedded deeply in the supply chain. Emerson is a company that gives supply chain advice and expertise to other companies, so naturally their own supply chain is top-notch. Emerson began using a Collaborative Supply Portal system which automates inventory, order, and shipping processes. Each piece of inventory has a barcode so that the system is able to be updated each time any action is taken. The system has helped Emerson run lean business practices. Read more.

Forecast Errors
Volume 2, Issue 7, February 16, 2015

A forecast error is the difference between the actual and predicted value. The consequences are expensive inefficiencies that can be resolved with lean manufacturing technology.

Companies Should Move from MRP Forecasts to End to End Pull

Manufacturing companies often use a Material Requirements Planning (MRP) forecast as a basis for Sales and Operations Planning (S&OP). However, MRP and supplier forecasting produce more problems in the supply chain than they solve. Errors in shipping, receiving or inventory reporting, or production schedule adjustments, change MRP data. Often the numbers cannot be quickly updated. Gartner Research Analysts recommend manufacturing companies to engage with customers and suppliers to establish a pull process from Finished Goods to Raw Materials. This is how Gartner defines End to End Pull replenishment. Read more.

Forecast Errors
Volume 2, Issue 6, February 9, 2015

A forecast error is the difference between the actual and predicted value. The consequences are expensive inefficiencies that can be resolved with lean manufacturing technology.

Inventory Shrinkage Can be Catastrophic

IMPO Magazine reported that for manufacturers, employee theft isn’t the only potential problem regarding inventory. Complex production processes and the sheer volume of products and materials in the warehouse can make it hard to get a handle on inventory. This can result in inventory shrinkage, where the actual number of items on your shelves is lower than the number of recorded items. In the manufacturing world, shrinkage can also refer to the loss of raw materials, such as metal or food ingredients, during the production process.  Regardless of what went missing or how it went astray, even small amounts of inventory shrinkage have a big effect on the bottom line. Read more.

Forecast Errors
Volume 2, Issue 5, February 2, 2015

A forecast error is the difference between the actual and predicted value. The consequences are expensive inefficiencies that can be resolved with lean manufacturing technology.

SKU Proliferation Requires Mapping the Supply Chain

Dan Gilmore, Editor-in-Chief of Supply Chain Digest talked about the inventory-to-sales ratio, as tracked by the US government. The ratio measures on-hand inventory levels against one month's worth of sales. As can be seen, other than the wild gyration in 2008-09 associated with the great recession, inventory levels have in fact been flat for a decade, even gently rising in the past few years. That despite lots of efforts to attack inventory, much technology was spent to do so. A general bias was seen in the last few years towards top line revenue growth, relatedly SKU proliferation and new product introductions, and longer offshore supply chains. The data suggests many companies may have simply hit an inventory wall within the context of their current supply chain designs. The imperative to map and model a company's supply chain took on extra urgency after the events of 2012, the earthquake and tsunami in Japan and massive flooding in Thailand, which caused huge supply chain disruptions. Shortly thereafter, a Toyota executive noted, "Our assumption that we had a total grip on our supply chain proved to be an illusion." Read more.

Forecast Errors
Volume 2, Issue 4, January 26, 2015

A forecast error is the difference between the actual and predicted value. The consequences are expensive inefficiencies that can be resolved with lean manufacturing technology.

Persistent Capacity Shortages Expected to Keep Cost to Ship Goods 'Elevated' 

Supply Chain Brain reported that FTR's Shippers Conditions Index remained basically unchanged from the previous months reflecting continued capacity shortages that degrade service and push rates higher. With sustained capacity tightness and fleets now announcing pay increases, the cost to ship goods is expected to remain elevated. The typical slowdown in freight tonnage during the winter months will only offer a minor and short term reprieve with the Shippers Conditions Index (SCI) expected to remain in the current range for the foreseeable future. These types of capacity issues are often causal to inventory forecast errors. Read more.