Ed White - Bayer Canada

I’m sure that all of us have played the Telephone Game at one time or another. One person starts a message that travels through several people and then we all have a good laugh over how much that message changed by the time it got to the last person. As funny as that can be in a game, think about the consequences if the information is critical in some way. Similarly we have all seen war movies where the captain of a ship issues an order, which is then verbally repeated by an officer, then by another sailor and so on until it gets to whoever does the actual action. Ever wondered why they go through this whole process of repeating when everyone standing on the bridge heard the captain’s original order?

There are two purposes to this; first and foremost it is to avoid the telephone effect. To ensure that the message is heard correctly before it is actioned. If it is repeated incorrectly then there is an immediate indication of a communications failure. The second purpose is to ensure that everyone else in the chain of command understood the order correctly. On a normal day that may not be a critical issue, but when the warship is in action it is very possible that any person in that chain of command could abruptly be the person in charge. That means that everyone needs to clearly understand what is happening and planned no matter what chaos is going on around them.

Obviously, forecasting is rarely a life and death type of situation (though it can be) but it is still critical that all communication be clear and understood. If the wrong information is used in the forecast process or the information is biased in some way by the process then the final result will not be everything it should be. (Think GIGO). The problem is that most people take communications for granted. They assume that everyone understood them or that they understood what they were being told and this is not always correct. If the information used to create the forecast, the S&OP process, the plan, whatever, is not understood and interpreted correctly then the results will be sub-optimal.

I am looking forward to the chance to meet with other IBF Best Practices Conference attendees and sharing thoughts on improved communications and why that is important to the forecasting community.

Ed White
Supply Chain Specialist
Bayer Canada Inc.

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ED WHITE Speak in Orlando at IBF’s:

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Navistar

Why don’t you have these in stock?

Why do you have so many of these in the warehouse?

Why is your fill so low?

Do these questions seem familiar coming from members of your management team or your customers?  Of course they do!  They are constantly asked throughout the year as we all try to balance customer expectations and fiscal responsibility by managing inventory at the appropriate levels.  But with so many variables within the supply chain how can we accomplish this goal?

It is no secret that forecast accuracy is connected to inventory levels; therefore, the more accurate our forecasts the lower our safety stock.  This frees up capital for other parts of the organization.  So how do we improve forecast accuracy?

I strongly believe that building a collaborative environment in our organizations as well as in our supply chains is the best way to achieve the lowest possible forecast error.  By building a cross-functional collaborative environment of all stakeholders we can proactively identify and control the associated variables of both the forecast and the supply chain.  For example, consider a large promotion where product is heavily discounted.  By leveraging the relationships with our suppliers, internal marketing, sales, and distribution network we can proactively work to maintain lean inventory levels while ensuring product availability to our customers.  With this coordination we can obtain information from our sales teams to gauge potential interest in such a promotion, and ensure that the marketing information is available to our customers so that they are aware of the timeline of the promotion.  Plus, we’ll know if our suppliers are capable of supplying the product in a timely manner and that our distribution network has the capacity to receive and ship, ensuring overall customer satisfaction.

At Navistar, we are constantly looking for ways to improve upon collaboration within our supply chain and forecasting efforts.  We have recently implemented a new supply chain system that exchanges information between Navistar and its suppliers helping us to have the right part, at the right place, at the right time!

I look forward to expanding on these concepts and sharing Navistar’s implementation experience with you at the IBF’s Best Practices Conference in October!

Joseph Motta
Forecasting
Navistar Parts Group

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