Today hurricane Nate's north winds are pushing against the bayous of Louisiana.
"We have too many planners. And even if we can afford the costs, we don't get good answers with our current forecasting processes," stated the supply chain leader on the phone. "I want to build outside-in processes, but I don't know what this looks like. Can you tell me what you mean by this statement?" My question to her was "Do you have the courage to upend the apple cart?" The essence of this discussion is shared in this post.
Today, the CPG industry spends around $225 billion on marketing. Digital marketing is increasing, but the effectiveness is questionable.
I attended and was priviliged to speak at the International Symposium of Forecasting (ISF), May 20-22nd in Santander, Spain. As a supply chain person, with a strong interest in forecasting, I was curious to get a deeper understanding of where the academics are and where they are heading. A main conclusion I took home was that there seems a great divide between 3 groups: the econometrists, the statisticians, and the data scientists.
Well here we are, into the second week of 2016. Christmas but a memory already and those New Year resolutions you swore you’d stick to look like a worse idea each day…
It’s also the time when some will need to start looking at how they’re going to manage this year’s Christmas period in their business, especially those involved in consumer goods which see a surge in demand as we hit the last quarter. Perhaps it went so badly in 2015 that it’s more a post mortem than a forward planning discussion!
Long product tails are good for digital businesses with minimal inventory costs, but represent a major financial commitment for make-to-stock manufacturers. A long tail severely impacts business performance – hurting forecast accuracy and forecast value-added, driving a lot of bias and inventory, hurting productivity, increasing obsolescence, and impacting S&OP. These all eventually have real financial impacts on your company. So just how long is the long tail for consumer goods? Well, it’s a lot longer than you might think.
At John Galt Solutions, we noticed a major trend in 2015 with our customers: a marked increase in confidence that their businesses will grow healthily over the next 1-3 years. This expectation subsequently beget other major strategic and tactical initiatives for our customers.
To prepare for growth they needed to refine their processes and ensure they had the right technology solutions in place to support those processes. In particular, many companies are maturing in their sales and operations planning (S&OP).
Writing recently at Forbes.com, Lora Cecere gave the supply chain management community a penetrating article on the connection (or, lack of connection) between efforts to improve forecasting and results found in better inventory. The article was entitled, “Does Better Forecasting Improve Inventory? Why I Don’t Think So Anymore.” [*]
While the whole article is certainly worth your consideration, I would like to call specific attention to some areas that I consider critical—and too frequently overlooked.
How to be Careful with Using Forecast Accuracy as a Job Performance Metric