Posts categorized as 'Best practices'

Forecast Accuracy: Keep Your Demand Management Process Honest

AlexaCheater

forecast accuracy represented by a dart boardOur partner Celestica recently published the following article,Are you keeping your demand management process honest? The author, Eric C. Lange, Director of Demand Planning and S&OP Services at Celestica, examines forecast accuracy and the main components of a demand management measurement tool and process. We’ve outlined his recommendations below so you can help improve your forecast accuracy, leading to improved business operations and ultimately greater success.

Reporting Forecast Accuracy

Even with an established Sales and Operations Planning (S&OP) process, if you’re neglecting forecast accuracy measurement and reporting you’re missing a critical piece of the puzzle for demand management success. Yes, it’s often a difficult, time-consuming and complex endeavor, but not doing it limits the prospects for success for the entire process.

While calculating forecast accuracy is important, it’s not enough. You also need measurement and accuracy reports to determine the effectiveness of the entire demand management process.

There are three main components of a demand management measurement tool and process:

  • Decide the method to calculate forecast accuracy
  • Determine how to calculate and eliminate any forecast bias in the process
  • Manage all necessary data to evaluate the effectiveness of the demand management process

Once these components are in place, it’s time to move on to determining added value in the forecast.

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Sales and Operations Planning (S&OP) – How to Stay the Course

JohnWesterveld

Two men discuss S&OPI came across this blog on sales and operations planning (S&OP) from the Institute of Business Forecasting and Planning (IBF) the other day. The article, S&OP and Culture Change: How to Stay the Course, written by Kathleen Winter, describes how corporate culture can derail an otherwise successful S&OP implementation.

Interestingly, it also describes the warning signs to look for if your S&OP process has fallen off the tracks. I suggest reviewing the blog to get a more detailed explanation of the warning signs, and what you can do to counter each, but I’ll summarize things here.

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Tools for Master Scheduling: Hug Your Master Scheduler Part Two

JohnWesterveld

A master scheduler plans out numerous shipping routes on a mapIn part one of this blog we determined that the Master Scheduler has a challenging job with Master Scheduling, but you may be thinking that ERP system you’ve spent millions on buying and implementing must make the Master Scheduler’s job so simple it’s as easy as pushing a button, right?

Well… not so fast. Traditional ERP systems are notoriously difficult to customize. If you want to perform your MPS process the exact way your ERP vendor has designed their ERP module, you might be OK. But if everyone does their process the exact same way, where is your competitive advantage? The reality is that every company has unique requirements and no one implementation can meet those needs without some customization. And ERP customization is expensive. Very expensive.

Typical ERP systems don’t allow you to simply try something out before committing it to production. The ERP idea of simulation is copying the database to another machine and running it there… several hours later you might be able to do some scenarios. Even if you could try something out, you don’t know the impact of what you’ve tried until you’ve explored that change all the way through your supply chain. If the change you are thinking of making will cause an overload on a constraint that is defined on another ERP instance at a different site, you won’t know there is a problem until you start executing. And then it’s too late.

Your ERP system has the capability to do rough cut capacity planning. That should help, right? Well, yes, rough cut capacity planning is better than nothing and it can give you some hints as to where problems might be. It does this by having you create “representative routings” that boil very complex routing and bill of material information into an approximation of key resource and key material needs. You see where this is going, right? You can have a perfectly achievable plan based on rough cut capacity planning and still not have a plan you can actually execute because you don’t have insight into the detailed realities of your supply chain.

Combine all this with the fact that managing any data in an ERP system is a cumbersome, part-by-part process and there is no wonder that many of the Master Schedulers resort to building complex models in Excel to do their jobs. Except… Excel is not the answer either. As has been commented on previously, while Excel can be effective for one-off analysis, Excel is error prone, non-collaborative and no matter how good you are at modelling, you simply cannot represent the true complexity of supply chain in a spreadsheet.

So, what is the answer?

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Supply Chain Risks: Big or Small, Plan For Them All

MerandaPowers

Supply Chain Risk I suspect that few folks in the supply chain management world would argue with the fact that supply chain management is risky business.

The reality is that risk comes in many forms (including anticipated risk, uncontrollable risk and unanticipated risk). It’s constantly changing. And the amount of risk being faced by supply chain professionals has been on the rise for the past 20 years.

When we talk risk, we’re not just talking about headline-making tsunamis, floods and earthquakes. We’re talking everyday risks as well. (Some might even argue that risk in daily business activities and decision making can be just as, if not more, impactful than exceptional risk events.) Ensuring success in ‘normal’ operating conditions and when faced with catastrophic supply chain disruptions is why developing risk management strategies should be a top priority.

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Lean versus EOQ? What’s best for your organization?

AndrewDunbar
  • by Andrew Dunbar
  • Published

manufacturing lean versus oeqA colleague and I started our morning off with a coffee and a conversation about integrating EOQ (Economic Order Quantity) into MPS (Master Production Scheduling). In no time at all we were debating between lean versus EOQ. While each approach has its merits, the two concepts present some conflicting advice. Here we go again! It doesn’t matter if you’re a technician working on the shop floor or an executive in the board room, if you’re in the business of manufacturing then this is a conversation you’ve had before. Without the right data it’s a debate that’s impossible to win, but I’m convinced that neither solution is perfect in all cases.

EOQ attempts to optimize lot size by balancing manufacturing cost (Fixed + variable costs) with things like inventory holding costs and capacity utilization. Lean relies on minimization of, among other things, lot sizes, inventory and waiting. Traditional ERP systems take fixed (often part specific) inputs for planning parameters and spits out a plan without any thought as to the efficiency (financial/shop capacity, etc.) of that plan. Master schedulers can manipulate the planning parameters to create lean or EOQ optimized schedules, but how do you decide which way is right for your organization?

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In-Memory Computing for Supply Chain Management: What, Where and How…

LoriSmith
  • by Lori Smith
  • Published

In-Memory Computing for Supply Chain Management: What, Where and How…The recently published Gartner report, The Impact of In-Memory Computing on Supply Chain Management (Payne, T., 21 October 2014), describes the potential of in-memory computing (IMC) for supply chain management (SCM) including supply chain planning (SCP) applications, as follows:

“By 2018, at least 50% of global enterprise companies will use IMC to deliver significant additional benefits from investments in SCM, and especially, SCP.”

As awareness of the potential for transformational benefits from IMC grows, companies are asking tough questions about how, where and what type of IMC-enabled supply chain applications they should deploy. This is important because, according to Gartner’s research, the potential “benefits will vary by organization size, functional domain, industry and supply chain maturity.” So while the list of advantages of IMC technology is significant – and includes performance and scalability improvements, facilitation of advanced analytics, and process innovation – like any technology investment, the impact to your specific environment will depend on the chosen solution approach.

Gartner outlines three styles which include:

  • Native IMC: These applications are “developed from inception on the basis of IMC design principles”
  • Retrofitted for IMC: These applications were “originally designed on traditional technologies (for example, RDBMSs), but are now replatformed on top of an in-memory data store”
  • Hybrid IMC: These applications “use IMC design principles and technologies only in part, usually to store (at times, only temporarily) and process the most performance or scalability sensitive application data, or to support real-time analytics”

Interestingly, the Gartner reports states…

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Supply Chain Professionals Speak on Delivering Better Business Outcomes with Kinaxis

MelissaClow
  • by Melissa Clow
  • Published

I wanted to share this video compilation of several supply chain professionals that we have interviewed over the years. In the following clip these supply chain practitioners share their opinions on:

  • What is the primary change we are seeing in today’s supply chain?
  • What are key supply chain challenges organizations are faced with today?
  • How does Kinaxis compliment and extend ERP investments?
  • How is Kinaxis helping improve supply chain processes and deliver better business outcomes?
  • How is Kinaxis unique in helping solve complex supply chain challenges?

Hear customers from Qualcomm, TriQuint, Flextronics and Jabil speak on how RapidResponse has transformed their supply chain.

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What the Analysts Are Saying About…A&D Supply Chains

BillDuBois
  • by Bill DuBois
  • Published

What the Supply Chain Analysts Are Saying About A and D Are you looking for some reading material to pass the time on your next flight? Even if you’re not you should check out Supply Chain Insights, Supply Chain Metrics That Matter. For the past several years, Supply Chain Insights has been delivering this research series. What caught my eye is that for each report, they do a deep dive on a specific industry and use a mix of financial data, survey research results and interactions with their clients to help get a better understanding of various industries’ supply chains.

I spread my Supply Chain wings at an Aerospace company and since Aerospace and Defense is a key vertical market for Kinaxis, the recent Supply Chain Metrics That Matter: A Focus on Aerospace & Defense report was downloaded on my laptop to read on my next flight. The research benchmarks A&D companies against other industries and looks at the top five A&D companies over the last decade. Although it didn’t give any suggestions on what to do when you find yourself in row 32, you know the one next to the washroom, it did discuss the challenges the industry is facing as well as offering up solid recommendations for areas of improvement.

From a challenges perspective, here are the highlights covered in this report.

The obvious challenge is the complexity in the A&D industry. The report uses the Boeing 747-8 International as an example. It has about 6 million components which are manufactured in 30 countries by 550 unique suppliers. Think about those design, sourcing and delivery challenges.

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