To set up a perfect demand forecasting process, you need to get four things right: granularity, temporality, metrics, and process. — When it comes to demand forecasting, most supply chains rely on populating 18-month forecasts with monthly buckets. Should this be considered a best practice, or is it merely a by-default, overlooked choice? I have seen countless supply chains forecasting demand at an irrelevant aggregation level — whether material, geographical or…

Using cutting-edge machine learning models, SupChains delivered a forecasting model for an international FMCG reducing its forecast error by 30% compared to the benchmark and cutting its bias to virtually zero. The client used the forecast to plan its 2023 purchasing budget. Business Situation The client, an international FMCG retailer operating more…

Planners usually set targets as dynamic period coverages or fixed quantities. As described in this article, both techniques have their pro and cons. In both cases, you will have to rely on a solid automated quantitative model to refresh your targets regularly and focus on exception and alert management. — Before discussing how to express safety stocks, let’s recap some critical points. Many planners and practitioners confuse safety stocks, reorder points, and order up-to level. These three concepts are intertwined but are different. Let’s review them one by one:

In this article, I outline six drivers that influence how much service level you need to provide to your clients to maximize your profits (while minimizing your costs and risks). I conclude it by introducing a service level targets classification matrix. — Inventory is the connection between your supply chain and your clients. Stocking products allows you to decouple demand from supply and grants your clients instant access to your goods. Higher service levels will only bring more satisfaction to your clients — but it will come at a financial cost and…

Using cutting-edge machine learning models, SupChains delivered a forecasting model that helped an international manufacturer to reduce their forecast error by 20% compared to the benchmark. The client is now using this model as a baseline for its monthly demand planning process. On top of the extra forecasting accuracy resulting…

Service level metrics often confuse planners. This is dangerous — especially if you deal with inventory targets — as using different definitions will result in very different numbers and KPIs. This article highlights the main types of service levels, illustrate them with examples, and discuss their pro and cons — no more confusion. — This article is an extract from my book Inventory Optimization: Models and Simulations.

This article discusses how inventory planners can cope with variable lead times. I will first illustrate the fundamental problem using dice. We will then highlight practices to evaluate, reduce, and stabilize lead times. — The current shortage of shipping containers is putting supply chains around the globe under pressure as lead times increase and become less reliable. Dealing with long chaotic lead times is a nightmare for inventory planners. And a showstopper for service levels.

Supply chains struggling with inventory planning face low service levels and dead stocks. If you feel like you have too many of the wrong products and not enough of the right ones, this article is for you. — Inventory Done Right. Stocking products is helping companies around the globe to supply their clients on time while providing a buffer against any unforeseen event (we are looking at you 2020, 2021, and 2022). …

I often get the following question from my clients and trainees: To express the forecast error as a percentage, should we divide the forecast error by the demand or the forecast? Basically, we can compute the forecast error percentage by dividing the absolute error by the demand; or by the…