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Machine learning (ML)a specialized field within artificial intelligence (AI)is revolutionizing demandplanning and supply chain management. According to McKinsey , organizations implementing AI-driven demand forecasting solutions can reduce forecast errors by 30% to 50%.
In follow-up qualitative interviews, one of the largest issues with organizational alignment was metric definition and a clear definition of supply chain excellence. In my post Mea Culpa, I reference my work with the Gartner Supply Chain Hierarchy of Metrics. Error is error, but is it the most important metric? My answer is no.
The waste included: Negative Forecast Value Added (FVA) in demandplanning. In 85% of organizations that I work with, conventional demandplanning processes increase forecast error. This is amplified across the supply chain into an exponential impact on inventory and planned orders for manufacturing. Most likely.
Anyone who has done demandplanning knows it is extremely complex, with forecasting challenges and rapidly shifting consumer demand, often exacerbated by seasonality, new product introductions, promotions, and myriad causal factors (e.g. Data Variety The more different types of data sources you factor in (e.g.
Small companies outperform large companies, and the marquee customers of major supply chain planning technology providers underperform. The issue is that when companies optimize functional metrics, they throw the supply chain out of balance and sub-optimize value. Rethink planning based on the art of the possible and drive value.
This article is a shortened version of themes & topics discussed in our newest DemandPlanning Core White Paper. Demandplanning has long been a requisite of supply chain management, but in a modern, high-speed environment, it’s become something more: a strategic lever for agility, and competitive advantage.
At a high level, procurement focuses on sourcing the goods and services an organization needs, while supply chain management oversees the broader flow of those goods, from raw materials to end customers. Supply Chain Management (SCM) involves orchestrating a product’s or service’s entire lifecycle, from sourcing and production to delivery.
Do Set Clear KPIs and Governance Structures : Establish transparent metrics for sales, coverage, and service levels. Regular reviews and joint business planning foster accountability and trust. Do Embrace Technology and Data : Use real-time data for demand forecasting, inventory management, and route optimization.
Clear operating strategy and definition of supply chain excellence across plan, source, make and deliver. A shift from functional metrics to a balanced scorecard. I like the use of growth, margin, inventory turns, Return on Invested Capital, customer service and ESG metrics. A Focus on Error in DemandPlanning.
The same “If” statement was repeated for a host of financial and operational metrics. The following will delve into some of the intricate farm-to-table challenges that supply chains face across sourcing, demandplanning, procurement and inventory management, transportation, and warehousing.
Management and planning of the entire network against a value network strategy. Integration of corporate social responsibility metrics in planning. Comprehensive view of source, make and deliver. Recognition of asset strategies in go-to-market plans. Focus is on make, source and deliver together.
Most supply chain leaders cannot get their groove on because they generalize–the use of the same metric targets and tactics for the supply chain without paying attention to the flows. Note that at this time, demand volatility risk was larger than economic uncertainty. The answer is more than simple demandplanning techniques.
Top 3 Demand Forecasting Mistakes —How To Avoid Them with Demandplanning software Demand forecasting is a critical facet of successful business operations, acting as the helm guiding companies through the rocks hiding beneath the water of market demands. Neglecting these can distort your forecast.
Gartner says that the most common outsourced SCP processes are inventory management, statistical forecasting and service parts planning. Companies moving to BPO in these practice areas are experiencing supply chain improvements in metrics such as inventory turnover and customer service. Those companies also reduced planning spend.
Price Index Elasticity for Pricing and Promotion Planning: As we are going through global price inflation and facing a recession, consumers and businesses are becoming more conscious of their spending and looking to minimize costs when shopping for goods and services. These metrics can also be used in inventory planning decisions.
In this world of demand volatility, processes need to shift to be outside-in to use market data. Effectiveness in Sales and Operations planned declined over the last decade as organizations attempted to tightly integrate the budget to the demandplan and constrain operations based on the financial plan.
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Closing the gaps happens when there are aligned metrics, clarity of vision and aligned planning processes. For clarity, the definitions are: -Strategic Planning: The frequency is either monthly or quarterly and the focus is on long-term planning. Metrics Alignment. They lack cohesion.
I would like for us to move past the conventional view of sourcing strategies and globalization to drive improvements to the supply chain in a variable world. The populist narrative of sourcing globalization is only part of the story. This is especially true in the world of demand management. Let me explain. Forecastability.
Running procurement and supply chain without metrics is like driving blindfolded. Decoding the Metrics: What Are They Telling You? A lower TCO indicates better value sourcing, even if the initial purchase price isn’t the absolute lowest. Internal warehouse or planning problems? Action: Investigate root causes.
The company sources goods from 34,000 suppliers out of 30 nations. In the annual report where they report on their key performance indicators (KPIs), they don’t just report on core financial metrics and the NPS, they also have people metrics. The company has shown sustained improvement on this metric.
Based on the work with Georgia Tech, we are getting clear on which metrics matter by industry. As companies adopt a balanced scorecard, the functional metrics shift to a focus on reliability. Then take an inventory of all the sources of channel data in the organization. The models also need slight tweaking.
It often employs statistical metrics like MAPE (mean average percentage error), which has hit a wall in recent years due to increased demand volatility and this approach's mostly backward-facing nature. DemandPlanning. A multi-step operational supply chain planning process used to create reliable forecasts.
Traditional demandplanning has long been owned by only the supply chain organization – gathering data from all corners of the business through lengthy spreadsheets and often leaving out critical information. They are managing complex spreadsheets populated by multiple sources and stored in too many locations.
Traditional demandplanning has long been owned by only the supply chain organization – gathering data from all corners of the business through lengthy spreadsheets and often leaving out critical information. They are managing complex spreadsheets populated by multiple sources and stored in too many locations.
We offer a single platform to address specific supply chain topics, including allocation, supply and inventory optimization, sourcing management, automated order promising, data management, predictive analytics, demandplanning, optimization, demand sensing, and more.
Artificial Intelligence Supply Chain Visibility Regulation & Compliance Sourcing/Procurement/SRM Supply Chain Security & Risk Mgmt Sustainability & Corporate Social Responsibility RELATED CONTENT RELATED VIDEOS Subscribe to our Daily Newsletter! Yee Chow is global head of strategy and implementation at Zevero.
In my earlier blog , I explored how integrated business planning (IBP) can help bring together finance and supply chain operations. IBP helps achieve key performance indicators (KPIs) like sales, customer satisfaction, inventory level and other metrics outlined in the strategic plan. 74% supply performance.
Digital commerce efficiently requires the digitalization of many customer-facing operations and sourcing and procurement. For businesses of all sizes, the digital transformation of supply chain planning became the most important initiative. . These data sources are often spread across multiple platforms and come in various formats.
Gartner says that you shouldn’t just pitch forecast accuracy to your executive management, but translate your plan into business metrics. Gartner recommends defining demandplanning best practice, then launching initiatives to fill the gaps in your organization. 2% reduction in transportation costs (percent of sales).
The demandplanning cycle is a supply chain management process that uses forecasting to understand the demand for products. Demandplanning strikes the balance between having sufficient stock levels to meet demand without having surplus. The demandplanning cycle uses the following systems: Data management.
They source from approximately 15,000 suppliers with a sourcing spend of over €7 billion. But even multi-sourcing is not enough. A supply chain is mapped, where components are source from, how they flow through a supply chain to factories and out to customers. Concurrent planning is kind of amazing.
Gartner says that the most common outsourced SCP processes are inventory management, statistical forecasting and service parts planning. Companies moving to BPO in these practice areas are experiencing supply chain improvements in metrics such as inventory turnover and customer service. Those companies also reduced planning spend.
The regulation is designed to provide European consumers with extensive data about the provenance of the items they purchase, all the way back to the sourcing of raw materials. Beyond the promotion of ethical sourcing, it’s also about “how we can extend the life of products,” Balaam says.
Cardinal Health’s senior vice president of global logistics, said of their implementation of the Kinaxis’ supply chain planning (SCP) solution, “I was scared! Pete Bennett, and his co-presenter, Mary Byrne, the vice president of supply and demandplanning, spoke during a presentation at Kinaxis’ user conference Kinexions.
Webinars Watch: An Alternative to Traditional Battery-Making Technology for EVs Sourcing/Procurement/SRM Watch: Getting Ahead of Customs Compliance Violations Regulation & Compliance Five Ways AI-Enabled Digital Twins Will Shape the Future of Supply Chains Technology Digital Edition SupplyChainBrain 2025 ESG Guide: Is ESG Still Relevant?
That’s why staying on top of the latest supply chain planning trends is so important – they can make all the difference when it comes to staying competitive, reducing costs, and meeting your customers’ needs. Here are some highlights from these trends in 2023 and implications on supply chain planning. and Europe.
Gartner, for example, places demand forecasts at the top of their Hierarchy of Supply Chain Metrics to highlight the impact of forecasts throughout the supply chain. While not rocket science, drastically improving SKU-level demand forecasts will require investments in people, process, data, and enabling solutions.
Available to Promise (ATP) Available to Promise (ATP) is a real-time inventory management metric that tells you how much of a product you can promise to customers without overcommitting. Weve even included some examples of these KPIs using pre-built views for inventory reporting from our Stratum business intelligence solution.
The winners drive improvement while posting financial results in the Supply Chain Metrics That Matter ahead of the peer group. A Supply Chain Leader will make progress on both of these key metrics with a very tight and controlled pattern. Global Satisfaction with DemandPlanning. It requires discipline and knowledge.
A single, unified data model depicts the immediate financial impact of plan changes. With a single version of the truth, planners can model scenarios for S&OP meetings, so stakeholders from sourcing, manufacturing, logistics, sales, and finance can assess the options and trade-offs.
” At the other end of the continuum is the argument that “ Forecast error is the most important metric to improve.” I do believe in demandplanning, but most companies overstate forecast improvements. Many companies implemented demand management processes as a technology project. Everyone has a bias.
Each customer in US or EU might already control the source of raw materials, ask you to provide dedicated production lines, nominate 3pl companies and air/sea carriers. 3) Align DemandPlanning Across Supply Chain. 7) Adopt Both Service and Financial Metrics.
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