Forecasting Accuracy: GET OVER IT!!!

The farther out you look the less certain you are

Just ask the weatherman. They are lucky to be accurate out a week. Yet in supply chain, we expect our salespeople to be accurate with their forecast. We complain every time not enough orders come in to consume the forecast. And we complain every time too many orders are taken in. We have to realize in supply chain, that to project out a month or a year ultimately means we have to be able to read the customers mind exactly a month out or a year out. How is that going to happen when we ourselves don’t even know what we’ll be buying a week from today, let alone for dinner tonight?

It’s not very often I torch us in Supply Chain, but on this one I need to.

Get Over It!!!

Work with Sales to come up with consistency in the forecast and work to reduce your lead times to the customer. Manage demand and build a process. If we’re off by 15% consistently we can always adjust by 15%. If we drop our lead times by 50%, we allow our customers to wait longer before they need to commit and therefore they too can firm up their demand and give us a demand that will be less apt to change.

It sure seems like reducing lead time is popping up all over the place!!! What do you suppose that’s telling us?