Mike Kelleher - Hollister

Motivational speaker Lou Tice called it a “Scotoma”—an area of partial alteration to one’s field of vision.  Allstate Insurance represents something similar in one of it’s television commercials featuring a man by the name of “Mayhem”.  In this particular ad we see Mayhem clinging to the side of an unsuspecting woman’s SUV claiming to be her blind spot. Acting as the woman’s blind spot in her car he tells her its all clear to change lanes however, when she proceeds to change lanes she crashes into another oncoming truck.  How can this so called “blind spot” affect a company’s demand planning & forecasting process or even the bottom line?  If this blind spot impacts management, could it impact the entire team?

The answer is yes it can.  I had been working in the forecasting and demand planning fieldfor 17 years when I discovered that I was the blind spot, the Scotoma, in the process.  I came to understand that I had allowed my wealth of experience to overshadow the needs of the company.

In the session I will be giving at IBF’s Supply Chain Forecasting & Planning Conference in Scottsdale, AZ you can hear not only some of the warning signs of a potential blind spot but also how to re-energize ideation in yourself and others in order to eliminate the blind spot or neutralize its effects.  I will also provide five important qualities that reporting should contain, and I will touch upon the qualities of a great forecaster as well.

We are fortunate to enjoy the world of forecasting.  Forecasting mixes the discipline of science with the beauty of art.  I hope you will join me in generating ideas and lighting a new path to success.

Michael Kelleher
Chief Forecaster – North America
Hollister

Hear Michael Speak at IBF’s 

John Brown - Coca Cola

How often have you heard these words during a meeting in your office? “Say what?  Forecast for an unplanned event?  Isn’t that like buying flood insurance in Phoenix?

Regardless of whether or not we choose to plan for them, catastrophes happen. However planning ahead can mean the difference between success and failure when these situations arise.  Let’s look at the recent earthquake in Japan.  Should we forecast for earthquakes?  In Japan earthquakes are a daily occurrence so the answer should be yes.  Is it necessary to forecast for a 9.0 earthquake?  Maybe not, but it happened.  Follow the earthquake with a tsunami? This is definitely a possibility seeing how Japan has so many coastal regions.  Now we need to forecast a third contingent event, i.e. the damage to the Fukushima nuclear reactors and then identify and plan for the global impacts, especially in the electronics and automotive industries? OK, now this is getting ridiculous.

All of the above events happened and they will happen again. The event will probably not be an earthquake and most likely will not happen in Japan. But somewhere, sometime, you can be sure that we will experience another significant disruption to our supply chains.  Take for example, what just happened at the Shell oil refinery on the island of Pulau Bukom near Singapore. This is the company’s largest refinery, which just experienced a major fire and as a result has to be shut down as of 03-Oct.  What will the impact be?  Only time will tell.

So what message is here?  Simply put:  We must know and understand our value chains.  Where the dependencies and what are are the weak points.  What would we do if we lost manufacturing at site “X”, lost supply from supplier “Y”, or were suddenly unable to use shipping route “Z.”?  What if a pandemic broke out in the country where we have our greatest revenue base?  Each company and each value chain has unique characteristics.

We cannot afford to think only in terms of getting products made and delivered either.  We must think about the effects that risk events will have on the demand for our products.  As many have seen, when the economy tanks (also considered to be a risk event), the demand for durable goods declines and  purchasing discretionary items becomes delayed because consumers hunker down for the economic winter, and hope it doesn’t last too long.

I look forward to sharing my experience as the keynote speaker and meeting all of you at the upcoming Supply Chain Planning and Forecasting: Best Practices Conference in San Francisco. As far as Risk Management is concerned, don’t expect a simple answer because unfortunately there isn’t one.  You will, however, learn how to build a framework that can make you more prepared for the unknown – and plan for it.

John J. Brown, PE
Director, Risk Management, Supply Chain Development
The Coca-Cola Company

Hear John’s Keynote Presentation at:

John Gallucci - Nice-Pak, Inc.

“So, even a well thought-out forecasting process can be wasteful if it is not done properly.” This was a remark made by one of the attendees who came to hear my “Lean Forecasting & Planning” presentation at IBF’s recent Business Forecasting & Planning Academy @ 2 Levels.  This declaration was also one of the more noteworthy “a-ha!” moments of the workshop.  I designed the session so that it focused on the application of lean principles in the forecasting process.  We defined any activity that did not create value for the consumer as wasteful, and then targeted those activities for elimination.  Attendees also received some tools to assess where waste exists in their companies, and were able to provide an unending list of examples in their current processes such as…

… the duplicate activities that take place because of a  lack of trust and poor communication across functions built on a silo mentality

… the painful manual processes that could be automated if capital funds ever become available

… the forecaster who spends most of her time on “C” and “D” items

… the egomaniac running Sales who pushes the Consensus Team to change their projection so he can meet his own objectives

….Etc. etc.

This IBF workshop also reviewed the opportunity cost of waste in Forecasting. Opportunity cost reduces an organization’s clock speed, reduces margins, and drives a less productive culture.  It also focuses key resources on meaningless internal positioning tactics, while the competition is working towards creating the next big idea!  One attendee at the workshop provided an example where her cross-functional team spent over 100 hours per month building a forecast that was never applied to their advanced planning system.  What a waste!

The application of lean principles is relatively new to Forecasting, even though it is something we have been doing  for years without recognizing it.  The elimination of bias, for example, is driven by a zero-waste lean mentality.  Pull-based market-driven S&OP is also emerging as a trend for leading Planning organizations.  These activities show clear progress, but they only address part of the opportunity.

We must take a more holistic view when targeting the elimination of waste in the Forecasting process.  It exists in our processes, policies, and systems.  It is an unwieldy enemy that transcends functions and requires change management practices.  Eliminating waste from Forecasting  requires continuous improvement techniques that by definition never reach an end-state.  The task is difficult, but then again, the most fulfilling ones often are.

A brief role-playing scenario in the IBF workshop provided clear proof that lean forecasting is a competitive advantage.  My journey has begun.  Has yours?  Where does waste exist in your forecasting organization?  Are you up for the challenge?

John Gallucci
Sr. Director of Supply Chain
Nice-Pak, Inc.

Hear John Speak at

Alan Milliken - BASF

This past week the mighty LA Lakers, were swept by the Dallas Mavericks in four games.  The Lakers had won two straight NBA titles and were favorites of many to three-peat.  Immediately after the 4th loss, which turned out to be one of the five worst losses of  series deciding games in the history of the NBA, rumors began to circulate about conflicts within the organization.

Several experts said that fans should expect to see many changes within the Lakers Organization coming soon that would affect members  from top to bottom.  They commented that LA had not reached a consensus in regards to what is the best strategy or the best way to approach the execution of that strategy. .  There appeared to be disconnects between upper management and the coach as well as between the coach and the players.

The LA Lakers example exemplifies the fact that   it might be easy to bring a group of professionals together and say they are a team but achieving teamwork that leads to overall organizational success is much more difficult.  This  also makes it clear that spending money and throwing resources at a process does not guarantee success.  Quite often in sports when the under-dog wins you hear folks say, they may  not have the best resources but they had the better team.

The same principles apply to businesses and the S&OP process.  A strong S&OP Team can be the difference between winning and losing.  Conflict among team members and lack of consensus on the game plan can lead to disaster. Failure to gain commitment from all key stake holders can derail the process.  LA’s bench (reserves) were totally outplayed by the Dallas reserves.  We must always remember that operational excellence is driven by People-Process-Technology but only one has the ability to think and act accordingly.

Strong teams must be able to anticipate change and respond to issues in real-time whether they work in business or in sports.  Dallas’s strategy was to post up outside 3-point shooters, move the ball inside and then pass outside to take the open 3-point shot and LA was slow to recognize and even slower to respond. . Likewise, S&OP cannot be effective unless team members can quickly change plans and execute  the new plan.  If your competitor has decided to take some 3-point shots you had better be able to quickly mount the proper defense.  Those who cannot do so will find themselves trying to explain their ineptness to their fans in sports or in the case of S&OP to the Board of Directors.

If you are wondering what happened to the Lakers or more importantly why  your S&OP Team is not winning, you should attend the Best-of-the-Best S&OP Conference in Chicago.

There you will learn:

• The latest technology trends with software providers on the leading edge.
• How successful firms leverage people-process-technology to improve performance?
• How to design planning processes and configure software to enable best practices?
• How to build teamwork and consensus that results in winning.

Attend the IBF’s Best-of-the-Best S&OP Conference in Chicago this June.

Alan L. Milliken,  Business Process Education Manager
BASF Corporation

Hear Alan Speak at:

Adam Coy - Morrisons

I suffer from a recurring dream. In that dream, I am standing in front of 300 Stock Controllers explaining how an external baseline will work alongside causal forecasting. The results of this will generate a Simple Exponential Smoothing forecast which in turn will produce auto sourced algorithms over your Bayesian plan. “Don’t worry though,” I can hear myself saying. “You will be alerted when this happens!”

We all know what always happens next. The business users are left baffled, confused and disengaged throughout the entire process because the benefits of forecasting were not clear, and were not credible.  Most importantly the benefits of forecasting were not understood. You can’t take people with you unless they understand the vision and what it will do for them and their business.

At Morrisons our approach to the introduction of advanced forecasting has been focused on engagement. That is engagement in the process and the people, not just the calculations. Forecasting for us is not a dark art, it is an art of the possible.

We have come to believe that the best ideas are often the simplest. Being able to take something complex and make it appear simple without dumbing it down takes more hard work than one might imagine. It is a process that relies on building trust, credibility and scalable results towards a shared end goal. That end goal being one version of the truth across planning and execution.

Go back to that dream for a minute and imagine you were sitting in the audience. You hear me talking about automatic promotional flagging, which would allow you to improve promotional forecasting by 75%. You then hear me talking about the ability to roll up demand to any level of the business in order to allow better visibility across longer horizons. You also hear me talk about true management by exception, giving you time to plan ahead on  events that really matter at that moment. These are all the same things that I described earlier, but this time I focused on demonstrating the business value and on building the capability in the teams that maintain our world class Supply Chain.

I look forward to taking you with me on our journey from ‘Baseline to Frontline’ and sharing best practices across industries at the IBF Conference in Orlando.

Adam Coy
Project Lead
Morrisons Supermarkets PLC

Hear Adam Speak at

Maria Simos CEO e-forecasting.com

A big treat in attending a conference is not only learning from attendees, but also having the benefit of one-stop shopping when it comes to vendors in the exhibit hall.  These vendors travel across the country, often times lugging huge displays, screens, white papers and swag to meet with current and potential clients and share with them what their software can do to help assist in their planning needs.

What better way to make this trip even more worthwhile than to share some top trends and news from the companies that have made the trek to exhibit this week at the IBF Best Practices Conference?

Top tier sponsors of the show JDA is coming in with major company news.  They are now the largest single company for supply chain planning and optimizations thanks to their recent acquisitions of competing firms Manugistics and i2 as recently as January.  With this synergy, the company now has over 6,000 companies across different industry segments using their software.  Danny Halim, VP of Industry Strategy and Calvin (Cal) Otto, Business Development Manager shared that what makes JDA truly unique is the company’s intimate knowledge  across the entire supply chain. This includes everything from raw materials to the retail space with the consumer experience.  Their company recently announced record first quarter profits, making Q1 the 22nd consecutive profitable quarter for the firm.  A major trend they see is the idea of supply chains competing versus one another rather than individual companies doing so with a convergence of the supply chain.

Smart Software and their Director of Sales Gregory Hartunian shared some impressive news that they have received not their first, but their second National Science Foundation Research Grant (NSF).  Ten years ago they were awarded their first Small Business Innovation Research Grant from NSF to develop a technology called the Smart-Willemain method of forecasting intermittent demand, also known as slow moving demand.  With their second NSF grant, Smart Software will further expand upon the Smart-Willemain method.  With this research completed, they will be the only vendor to offer a ‘next generation’ forecasting solution for slow moving capital goods, like service and spare parts.  Companies use this technology for a variety of applications, Kimberly Clark is using this to track in-house inventory as an example.

Tom Reilly from Autobox shared news of a new joint project with HP which was presented in more detail  Friday.  For this project, they were approached by a Principal Scientist of HP to work and develop a semi-hourly forecast model.  By breaking the day into 48 discrete time periods they are able to better determine precise demand at specific times throughout the day.  This methodology has been used for the last three to four months with application in call centers.  This method also easily translates using a mixed frequency modeling approach for making power estimations for power plants.

Forecast PRO’s Trac has a neat feature which shows how well the model fits with the history.  Bob Leonard gave a brief demonstration showing the archived forecasts over time.  Using this rich forecast archive helps track the accuracy of lead times.  Their software is off-the-shelf and a 5 user system can be implemented for $15-22K.

Boardwalktech Inc will be launching the 3.2 version of their software this June.  The company’s collaborative platform supports concurrent multi-users  down to the cell level using a back end system.  The software is easy to use and can be role based.  The real-time server recognizes who made the last change and makes notations.  Benefits of this system include integration that takes place in weeks not months, it extends the collaboration process, reflects a complete picture of the business and provides greater visibility.

SAS is excited to announce a new forecasting server plug in for SAP.  The plug in, called SAP Advanced Planning and Optimization (APO) links to read and write from live cache.  In other company news, IBF long standing member Mike Gilliland’s intramural basketball team has won the SAS intramural championships the last 2 out of 3 years.  (It’s not always about the forecasts, demand planners also need to have some fun, too.)

John Galt Solutions Inc. has an Atlas Planning Suite which focuses on the consumer-driven supply chain.  The suite allows for use of POS data to help assist in reaching higher levels of forecast accuracy and has over 30 models built in for planning new product launches and promotional events.  Using POS data and forecasting new product supply are also topics that were touched upon during the speed dating session.

Logility has a supply chain management solution called Logility Voyager Solutions which is internet-based.  Given the global nature of their client’s businesses, they have built in multinational support.  The costs and prices are given not only in the currency of the items ‘home market’ but also in local and regional currencies.  With this built into the system, it helps users build rollups to greater levels of detail for their inventory, production and transportation plans worldwide.

RockySoft Corporation has the Inventory Management Suite with Demand Manager and Requirements Planner, aiding clients in reducing inventory.  The suite also includes S&OP and Economic Order Manager (EOM).  With these tools, clients are able to work with the full supply chain to determine forecasts, procurement needs and replenishment quantities. Using this software also allows practitioners to take advantage of price breaks and volume discounts and also use the suite as a support tool to make decisions on a management level for inventory valuation and performance monitoring.   One key feature with the EOM tool is that you can easily compare annual costs of inventory with the annual cost of ordering based on varying volumes.  The suite is easy to use and training on the new system can be done in only four hours.  RockySoft’s applications are comprehensive but not complex.

Another vendor is working to optimize the time it takes to make demand forecasts.  OM Partners USA has  Abhi Patel at the show sharing information on their supply chain planning software.  Their core strength comes with the ability to integrate the forecast with S&OP planning and scheduling.  The company has a variety of suites that peel time down from a 4-week to possibly one or two week cycle.

A lot was learned by walking around and visiting with the vendors during the Best Practices Conference.  At times, and I know this because I have exhibited at a fair number of shows myself, attendees are not necessarily jumping at the chance to come talk to vendors.  Being on the other-other side of things this time around working as an ambassador and live-tweeting and blogging about the event though, I found that the folks exhibiting at the show were just truly excited about the new things their companies are doing.  So many new applications are being developed in this space and it is a real energizing time in the field.  So next time you are at a show, take some time to hear what’s new in the industry.  Visit with the vendors and simply ask, ‘what’s new?’  It just may be the best way to see what’s next.

Maria E. Simos is CEO of e-forecasting.com, an economic research and consulting company based in Durham, NH with clients ranging from media, academics, federal banks, major manufacturers to other consulting firms.  In her role, Ms. Simos works to further develop the reach of e-forecasting’s economic data and reporting capabilities. She also works closely with clients to ensure that they are receiving the important forecasts, economic data and support needed to be successful. She promotes the work of e-forecasting.com and provides economic analysis through her twitter account (@mesimos) and via other social media outlets.  Ms. Simos holds a Master’s Degree in Management from Carnegie Mellon University where she focused her research on management and network analysis. Her research explored social and business networks and their tie in to culture in organizations.  Her undergraduate study was completed at the Tepper School of Business at Carnegie Mellon.

Maria Simos CEO e-forecasting.com

Wednesday afternoon kicked off this year’s Institute of Business Forecasting & Planning’s Best Practices Conference with a near-standing room only pre-conference Demand Management Forum.  The Forum was led by Mike Gilliand from SAS and a panel of experts who brought the group through three topics: (1) Applying demand management sensing, shaping and creating, (2) What management must know and (3) Worst practices in business forecasting.  The forum touched on many key issues faced by demand planning and forecasting professionals, giving the group a taste of what’s to come over the next two days.

What makes this group so unique is that they are all demand planners. While they hail from different organizations they share in this specific role and are all part of a community dedicated to sharing and helping each other learn new techniques and working through challenges together.  The last session, which was cheekily dubbed ‘a confessional’, had the panel and audience sharing stories of what didn’t work.  Try to imagine a room of over 75 people openly sharing mistakes and what was a disaster in their organization. For me this was such a refreshing experience seeing heads nod throughout the room as each participant spoke of their woes and a fury of note taking as a panelist or fellow forum attendee would provide some solutions or ideas for how to alleviate the issue.

Panelist Jonathon Karelse from Yokohama Tire shared a worst practices experience and led the group through his folly of using a collaborative forecasting system for tire demand that did not work.  While this was a method he learned at a previous IBF event, it happened to be ill-executed at Yokohama and led to excess inventory because of the bull-whip effect and beer games.  One might ask “What do beer and whips have to do with forecasting tire demand?” Jonathon explained the bull-whip effect that as the velocity of the end of the whip gets so high that once it hits its target and ‘snaps’ what you are hearing is the end actually breaking the sound barrier. He used this analogy to explain what happened to the errors in supply chain. The Beer Games reference eluded to an MIT experiment which showed that a lack of trust within an organization can cause too much inventory.  The Lessons learned were that removing the effect can be done by getting closer to each piece of the supply chain (and Jonathon still has a job so it must be true).

A few other ideas that came up during discussions:

• Arbitrary forecast error targets – Why does your company shoot for 5%? Is that realistic? Perhaps a more sound approach would be to work towards continuous improvement and aiming to beat the standard forecast model.
• Location-product combination – Working to prioritize this combination is important.  A 10% error in one location may not have the same impact and financial loss as the same error  would cause in another location.
• Excess of meetings – Having too many meetings and reports takes too much time away from actually analyzing your forecast.  Is your organization over-doing it by having the demand planner’s time split into too many directions?
• Backing into a number – Just don’t do it, whatever you do. This will come back to haunt you.

Today many of the panelists along with other demand planners attending the conference will give presentations that will go  more in depth into challenges and solutions faced by those in the role of  demand planner.  Is it all for not? Anish Jain shared with the group some statistics found in collected data the IBF has accumulated over the years which shows that forecast accuracy has increased while inventory levels have remained the same.  What does this mean? Are the forecasts being taken seriously?  I imagine this is a topic that will be talked about more throughout the conference.

Maria E. Simos is CEO of e-forecasting.com, an economic research and consulting company based in Durham, NH with clients ranging from media, academics, federal banks, major manufacturers to other consulting firms.  In her role, Ms. Simos works to further develop the reach of e-forecasting’s economic data and reporting capabilities. She also works closely with clients to ensure that they are receiving the important forecasts, economic data and support needed to be successful. She promotes the work of e-forecasting.com and provides economic analysis through her twitter account (@mesimos) and via other social media outlets.  Ms. Simos holds a Master’s Degree in Management from Carnegie Mellon University where she focused her research on management and network analysis. Her research explored social and business networks and their tie in to culture in organizations.  Her undergraduate study was completed at the Tepper School of Business at Carnegie Mellon.