Why probabilistic forecasting is better for inventory optimization

ToolsGroup

Last month we published a primer on probabilistic forecasting , an alternative to deterministic or ‘single number’ forecasting. Spreadsheets and legacy suites like SAP APO produce top-down aggregated forecasts using a deterministic approach.

Probabilistic Forecasting - a Primer

ToolsGroup

An experienced gambler might hedge their bet on multiple outcomes, rather than just the most likely "single number forecast". At ToolsGroup we have been big advocates of probabilistic forecasting (sometimes also known as stochastic forecasting).

Quantum Inventory Theory?

The Smart Software

The post Quantum Inventory Theory? Physics at the quantum level is quite weird – not at all like what we experience in our usual macroscopic life. Among the oddities are “superposition”, “entanglement”, and “quantum foam.”

How Demand Forecasting Helps You Manage Inventory

AFFLINK

As businesses scale, they need to investigate the accuracy of their inventory management and forecasting processes. Demand forecasting goes beyond simple estimates of product demand, looking into complex patterns over time to produce more accurate and timely predictions.

Automated Order Processing and Proactive Inventory Management

Speaker: Irina Rosca, Director of Supply Chain Operations, Helix

Companies should have seamless integration between order entry, inventory management, forecasting and supply planning models and purchase order status to sense risk, pull levers to mitigate potential risk, and communicate within and outside the organization.

Probabilistic Forecasting: Right Fit for Your Business?

Supply Chain Shaman

A Closer Look at Forecasting. Traditionally companies forecast using history (shipments or orders) and applying linear regression to understand the patterns of historical demand using these to estimate future requirements in a time-series format. Understanding Probabilistic Forecasting.

Common Forecasting Myths Debunked – Part 1 – One Forecast is Enough

Logility

This is the first of a series of four posts that will explore common forecasting myths. In supply chain the impact of a single error can quickly derail an entire forecast. Many companies believe that once a forecast is created success will follow throughout the product life cycle.

Gaining Clarity on Inventory Effectiveness

Supply Chain Shaman

The impact of complexity on inventory is not quick. To help, today I want to share some of the insights from our recent Inventory Optimization study. Inventory management is a hot issue. Companies invest in project after project, yet inventory levels remain the same.

Accurate Inventory Forecasting, No Crystal Ball Needed

Unleashed

Proper demand forecasting and inventory control can save a company from buying too much or too little of something, which of course avoids expensive overstock scenarios or stockouts. What is demand forecasting? Demand forecasting predicts what customers will buy, how much they will buy, and when they will buy it. Forecasting for success. Knowing where previous predictions have gone wrong or come true will help you define the parameters of your next forecast.

Improve Your Inventory Control with Demand Forecasting

Unleashed

Demand forecasting and planning sounds like a complex task requiring input from a team of accountants and economists but, in reality, it’s an easy way to improve your inventory control. In simple terms, demand forecasting uses supply chain information to plan the levels of stock needed to meet expected demand which gives greater inventory control to the supplier. Why forecast demand? Strengthening supplier relationships with demand forecasting.

Key Questions for a Successful Distribution Network

Speaker: Irina Rosca, Director of Supply Chain Operations, Helix

As we plan for the world of eCommerce and the customer expectation of quick, free shipping, our ability to forecast is turned on its head. This webinar will cover: Strategies for making high-level decisions about your network design and inventory distribution.

Forecasting: Let’s Start by Asking the Right Questions

Supply Chain Shaman

This is especially true for forecasting. I find that too many companies try to buy forecasting software through a Request For Proposal (RFP). How forecastable is your product set? What is your Forecast Value Add (FVA) by product segment? Ten calls.

Multi-echelon inventory optimization vs inventory optimization

ToolsGroup

Editor’s Note: Last year ToolsGroup became Microsoft’s partner for Multi-echelon Inventory Optimization (MEIO) in Industrial accounts. Microsoft and I collaborated on a blog introducing the basic concept of MEIO, comparing it with Inventory Optimization. Inventory Optimization

What’s Your Forecast Accuracy Target for 2017?

ToolsGroup

In 2016, it seemed as if everyone in supply chain was looking to improve their forecasting performance. How much can you realistically expect to improve your forecast accuracy each year? Inventory and CapEx required to support desired service levels.

Stop Leaking Money with Manual Inventory Controls

The Smart Software

An inventory professional who is responsible for 10,000 items has 10,000 things to stress over every day. The post Stop Leaking Money with Manual Inventory Controls appeared first on Smart Software.

Inventory Management Remains Challenging

Enterra Insights

Every business person who deals with inventory management is involved in a balancing act. Keep too little inventory on hand and you risk losing sales and, on occasion, customers. Keep too much inventory on hand and the costs add up resulting in lower profits. It’s little wonder inventory management systems have gained popularity. ”[1] He adds, “Even with all this power, there are several disadvantages to inventory control worth considering.”

Inventory, inventory, inventory. They’ve all got it – inventory.

Enchange Supply Chain Consultancy

Amongst the many variables in running a Supply Chain, the one certainty in FMCG, Pharmaceutical and Agri businesses is that inventory is solely in the eye of the beholder. FMCG Forecasting & Demand Planning Inventory Management & Stock Control Supply Chain Analytics

Is Inventory Waste or an Asset?

Supply Chain Shaman

We were discussing the results of the planning benchmarking work that we have just finished, and I was sharing some insights on inventory management when one of the panelists emphatically stated, “Inventory is a waste to manage. Inventory is both.

Inventory Can Be Scary

ToolsGroup

“Your inventory problem is scary because you’re selling out before you can make new items to meet demand”. Many retailers agree that inventory can be scary. Inventory distortion” (the combined cost of out-of -stocks and overstocks) accounts for $1.1

What’s Your Forecast Accuracy Target for 2019?

ToolsGroup

Editor’s Note: Two years ago we posted a blog about how to set an annual forecast accuracy target and it was one of our most popular topics. Many companies have already started their 2019 planning and budgeting cycles, so if you are in charge of demand forecasting for your company, it’s about time to thinking about your organization's 2019 goals. It seems as if everyone is looking to improve their forecasting performance. Forecasting Demand and Analytics

Multi-echelon inventory optimization vs inventory optimization

ToolsGroup

Editor’s Note: Last year ToolsGroup became Microsoft’s partner for Multi-echelon Inventory Optimization (MEIO) in Industrial accounts. Microsoft and I collaborated on a blog introducing the basic concept of MEIO, comparing it with Inventory Optimization. Inventory Optimization

Building a Business Case for Improved Demand Forecasting

ToolsGroup

I’ve always maintained that improving demand forecast accuracy, as helpful as it can be, shouldn’t be the end goal itself, but simply a means to the end. Gartner says that you shouldn’t just pitch forecast accuracy to your executive management, but translate your plan into business metrics.

Trade promotion forecasting: the present and the near future

ToolsGroup

Trade promotion forecasting is difficult: getting it right involves factoring in many variables. Forecasting demand data, not so much. To do this, the first hurdle is creating a good statistical baseline forecast.

Probabilistic Forecasting Can Extend the Life of SAP APO

ToolsGroup

Since the beginning of time – OK, since the beginning of demand forecasting the standard approach has been a single number forecast that works relatively well with stable high volume demand. Machine learning can refine the forecast by crunching external data.

Are You Crystal Ball Gazing With Your Inventory Forecasting?

StockTrim

When it comes to inventory planning, using a spreadsheet is about as sophisticated and reliable as gazing into a crystal ball. inventory forecasting machine learning inventory forecasting software inventory forecasting demand planning software

Seven Recent Trends in Retail Demand Forecasting and Replenishment

ToolsGroup

So it’s not surprising that many are looking for more accurate demand forecasting and intelligent stock replenishment. In a report entitled Market Guide for Retail Forecasting and Replenishment Solutions , Gartner analyst Mike Griswold spotlights seven recent trends in this area.

Why SAP APO Can’t Forecast Demand in Complex Environments

ToolsGroup

SAP APO is not equipped to address today’s supply chain challenges and that makes demand forecasting and supply chain planning more cumbersome and off target with APO or similar tools. APO’s“Top-Down” Demand Forecasting. Finally, ‘noise’ is not forecastable.

Simplify Supply Chain Forecasting

Logility

Is 100% forecast accuracy attainable? Anyone that has ever had to forecast demand for products or services knows that obtaining a consistently high forecast accuracy is part science and part magic. Clearly, forecast accuracy is very important.

Why You Should Embrace Uncertainty in Demand Forecasting

ToolsGroup

This explains also why supply chain planners struggle to improve their forecasts and end up hitting a ceiling. The increase of demand volatility in today’s markets explains why supply chain leaders tend to believe that their primary supply chain problem is forecast accuracy.

Forecasting the Long Tail and Intermittent Demand

ToolsGroup

Forecasting demand in the long tail is much different than in the head. Companies are dealing with more slow moving items with unpredictable demand patterns, which is making demand forecasting and inventory management more difficult. Inventory mixes become wrong.

Why CPG Demand Forecasting Has Hit a Ceiling

ToolsGroup

Most CPG companies have hit a demand forecasting ceiling. And complexity creates a challenge of how to forecast accurately when faced with new items, new channels and demand shaping. Many CPG companies are at a loss on what to work on to improve these forecasts.

How manufacturers optimize their inventories

ToolsGroup

Editor’s Note: Microsoft’s Colin Masson, Global Industry Director of Manufacturing Solutions (that's him on the left), sat down with me to discuss how manufacturers optimize their inventories. It then uses this model to understand the impact of demand forecasting on inventory.

Design, Operating and Situational Inventory Trade-Offs

ToolsGroup

Gartner analyst Paul Lord has developed a framework to better understand inventory trade-offs by categorizing those decisions according to the objectives they are meant to achieve: structural, operational and situational. or “How can we reduce inventory and improve our balance sheet?”.

How to Measure Inventory Health

ToolsGroup

Financial executives measure inventory health with metrics like inventory turns because they view the firm from a financial viewpoint - such as how much working capital is being tied up. The concept of inventory health is based on this expectation.

5 Considerations When Evaluating your ERP system’s Forecasting Capabilities

The Smart Software

Consider what is meant by “demand management”, “demand planning”, and “forecasting”. The post 5 Considerations When Evaluating your ERP system’s Forecasting Capabilities appeared first on Smart Software. These terms imply certain standard functionality for collaboration, statistical analysis, and reporting to support a professional demand planning process.