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 21, June 1, 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 Planning to Eliminate Errors

Demand planning is the art of integrating multiple, independent, and inaccurate signals into one accurate signal, according to Michael Massetti. Demand is the baseline for all things supply. Customers’ desire for a product drives the demand and is the foundation for business volumes. Without demand there is absolutely no need for supply and even less need for supply chain folks.  Demand planners have a plethora of signals available to them - point-of-sale (POS) data, macro market or economic trends, historic demand accuracy, promotional effects, seasonality, business targets, prior product launches, actual orders, and more. While these are options aplenty, by themselves, none are sufficient or accurate. 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 18, May 4, 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.

Moving Away from Forecast Driven Business Models

In a recent webinar, participants were asked “How accurate do you think the forecast for your company usually is?” With 54% of the respondents claiming less than 60% forecast accuracy, it is not surprising supply chain professionals have to spend a large portion of the day making additional corrective action spreadsheets and providing them to suppliers. Supply chain professionals in the automotive, aerospace, medical devices, electronic components, fitness equipment, pharmaceutical, and manufacturing industries were also asked how to improve forecast accuracy within the company. Two choices, “changing production to a demand-driven model” and “implementing a pull process,” (33% combined), though not a majority, bodes well for the future of manufacturing. Read more.

Demand Drive Supply Chain Management at Lowe’s and Home Hardware

Forecast Errors
Volume 2, Issue 17, April 27, 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.

Forecast Errors as Wrong as the Forecast

The Economic Detective blog recently shared some important data.  James Montier claimed that in the US analyst community, the forecasting error was 47% over 12 months and 93% over 24 months. To have forecasting errors almost as big the forecast itself, begs the questions as to why we have them at all. Granted, predicting the direction of a specific security price might be difficult, given the multiplicity of variables and innate complexity of expectations, but even broader market predictions have turned out to be mostly incorrect. Read more.

Forecast Errors
Volume 2, Issue 16, April 20, 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.

Manufacturer Eliminates Forecast Errors Moving To Pull-Based Replenishment 

A major medical device manufacturer moved from manual processes to a cloud-based automated system. By deploying Electronic Kanban the manufacturer, their customers and their supply chain partners benefited by an improved responsiveness to customer demand by transitioning from push or forecast-based production to pull-based replenishment, thus eliminating forecast errors. The new system allowed them to manage inventory and supply chain execution across their extended enterprise value chain. Read more. 

Forecast Errors
Volume 2, Issue 15, April 13, 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.

How to Succeed with Continuous Improvement

CEOs as well as division, middle, and other managers in manufacturing each recognize that time is a scarce commodity -- yet they are often resistant to implementing the one thing that is key to saving time and developing a culture of continuous improvement: asking employees to bring one improvement idea to recurring meetings. Joakim Ahlström has successfully helped dozens of organizations around the world such as Coca Cola, Volvo, Ericsson, and IKEA. His new book, How to Succeed with Continuous Improvement: A Primer for Becoming the Best in the World, examines the roadblocks that managers inadvertently create and the constructive ways (and reasons why) to replace them in order to achieve high company performance. Read more. 

Forecast Errors
Volume 2, Issue 14, April 6, 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.

Forecast Errors Rampant Despite New Training Methods

There are a new series of workshops and training methods utilizing the business processes and techniques found in Collaborative Planning, Forecasting & Replenishment. While presenters discuss how to effectively collaborate with trading partners to deliver greater efficiency across the supply chain and better customer service, forecast errors are still rampant. Connecting with trading partners to deliver a seamless omni-channel customer experience and developing and deploying key performance indicators (KPIs) to move target actions and desired behaviors to achieve objectives does not necessarily leverage best-in-class industry initiatives such as integrated business planning, predictive analytics, supply chain visibility, and demand signals. Read more.