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FORESIGHT, Issue 43
- The Impact of Strategy on Supply Chain and Forecasting by Bram Desmet
In this provocative article, Bram Desmet explores how a company’s market strategy affects its supply chain targets and forecasting methodology. The author introduces the concept of the supply chain triangle to illustrate the balancing act a company must perform to achieve the cost, service, and inventory mix that maximizes its return on capital employed. He then shows how the company’s strategic choice, be it operational excellence, product leadership, or customer intimacy, influences the position it seeks on the supply chain triangle and, in particular, its inventory targets.
- Achieving S&OP Success: How Principles of Team Effectiveness Can Help by Scott Ambrose
We know that Sales and Operations Planning (S&OP) is a cross-functional process, bringing a company’s demand- and supply-side people together to reach consensus on the demand forecasts and operating assumptions. The participants typically engage in a series of meetings across each month, and the process outcome is determined by how effectively the individuals collaborate within the team. As Scott Ambrose writes here, principles of team effectiveness have been widely studied, but not applied previously to S&OP. Scott’s article examines how recognition and implementation of these principles can improve S&OP collaboration and performance.
- Mission Based Forecasting: Demand Forecasting for Military Operations by Greg Parlier
In this fascinating discussion, military veteran and OR expert Greg Parlier examines the application of demand forecasting and inventory management in support of military operations. The commercial “point of sale” becomes the “point of readiness generation” for the military. And customer- demand forecasting becomes mission-based forecasting. Greg highlights problems that have inhibited the supply chain’s ability to achieve mission readiness. Among the most serious is the absence of historical data on demand and consequent inability to implement effective demand forecasting and planning procedures. It is encouraging that the military has been learning important supply-chain lessons from the business world’s application of OR techniques.
- Off-the-Shelf vs. Customized Forecasting Support Systems by Evangelos Spiliotis, Achilleas Raptis, Vassilios Assimakopoulos
Numerous forecasting support systems (FSSs) have been developed through the years to help companies select and implement forecasting procedures and to support managerial decisions. While the majority of these systems are off-the-shelf, the authors argue that such generic systems will not always be up to the task. Problems can arise due to lack of customizability, inadequate Web-based architecture, and poor user interfaces. The authors have developed a Web-based FSS specifically to forecast water consumption (in the province of Attica, Greece). In doing so, they took as a springboard many of the proposals for the design of an FSS presented in the special feature on FSS in Foresight’s Fall 2015 issue.
- Forecast Process Improvement at Shell Lubricants by Alex Hancock
In 2011, Shell Lubricants established a Central Forecasting Team (CFT) to deal with unacceptable forecasting performance. Alex Hancock worked with this team for four years, and the group eventually engineered a turnaround effort that identified and reformed practices blamed for much organizational pain. In this article, Alex reflects on the fits and starts at the CFT and reveals key lessons learned for reforming the forecasting function.
- Sales Forecasts for the Consumer Chain: Are We Kidding Ourselves by Joe Roy
“We should be making today what was sold yesterday, and shipping it tomorrow”— this is Joe Roy’s call to manufacturers and distributors of products. Joe argues that rapid response to changes in consumer demand should supersede the traditional supply-chain goal of establishing inventory targets based on sales forecasts. Furthermore, he states that the problem with sales forecasts is that they are typically for longer periods than required and that they serve as a crutch to manufacturing’s lack of responsiveness to demand. He advocates that, in a “consumer chain,” time means next day!