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Someone asked me a question about the impact of serial correlation (a forecast performance/error measurement) on Inventory problems.

In short, if someone consistently forecasts above, will they always have too much stock? Conversely if one consistently forecast too low, will they always have out of stocks?

On its face this seems right. However there always are buffers in the system. We’ve all heard of the bullwhip effect in which supply chain participants hedge up and down the supply chain to a point that someone always has too much or too little based upon the accuracy of the forecast. I would add, to Dr. Lee’s approach, that this also depends upon the education of the supply chain planning community within an organization.

Serial correlation (above) will result in too much stock unless you’re managing safety stock statistically and hedging against forecast error. The smoothing in most safety stock calculations manage against that. More to the point (above or below with regards to serial correlation), your planning group has to understand how the planning system is related. They must understand how others are building in a reaction to their performance.

Its interesting that my friend posed this question to me in this fashion because I was thinking about it in quite the opposite fashion. I was thinking about it from the perspective of looking at projected stock outs and correlating that with serial correlation.

Further, I was in the process of conducting a coverage duration analysis in the hopes of determining whether or not coverage duration relative to lead times and positive serial correlation were leading indicators of areas needing an inventory reduction strategy.

Net-net, this is one more screaming need for companies to not just view key performance indicators one-by one, but understand the nuances of how they are related (or not related).

Our work has shown even more indicators, that sitting untouched in tables in your JDA SCM suite, that could help save or make a quarter — especially when viewed through the lens of a profitability analysis.

Filed under: Financial Performance, Forecasting, JDA Demand, JDA Fulfillment, JDA Reporting, Planning Mindset, Supply Chain, improving employee performance | No Comments »

What happens when credit markets squeeze companies? How does it impact the supply chain?

Big Time.

When credit was cheap, inventory didn’t cost just as much. Now, inventory costs have increased due to the added cost of borrowing. In financial terms, it just got a whole lot tougher to manage working capital. Executives are looking for a quick, cheap fix.

They are not wrong. Most companies have the supply chain software and infrastructure they need. The problem is that their planners need to be trained or re-trained. Companies need to understand how to tune their supply chain tools to current realities.

In short, the world has changed; your planning department has to do more than incrementally adjust. They need to the tools and the confidence to adjust their supply chain planning tools to get the most out of their enterprises. Today.

Remember, that fabulous ROI that everyone got a promotion around three or four years ago after your supply chain system came online? That may be a short-term aberration; serious changes need to be made and the answer isn’t more consultants.

You can get in front of this power-curve by enabling your planning resources to own and understand the impact of their planning processes on the enterprises top and bottom line. One of the methods we suggest to our clients while we tailor a training program to their needs is to focus on both basic and advanced planner-focused online elearning.

To ensure that companies have achieved their goals, we work with managers around certification and guided exercises. Because the training belongs to your company when we leave, planners aren’t just relegated to using it as a 1-time “Planner 101” course; they can use their tailored, indexed lessons as refresher training and backup as long as they need to.

This is just one of the ways that we’re working to make sure that companies get the most out of their supply chains in the near term, with limited capital outlays.

Filed under: Financial Performance, Working Capital, eLearning, training | No Comments »

Every day treasurers and treasury departments look at their cash positions and, based upon what they need to do this week or this month (if they need cash), they go to the commercial paper market and ask to borrow, say $900,000 (for the day or week).

In exchange (as this is a loan) they pay back this commercial paper market the $900,000 plus the interest or fees on that money.

Why is this important? Well because this is the way business has been done, these amounts are really $50 million, $100 million on this market, borrowed and paid back, daily. And last week, when the money market funds blinked, the commercial paper market choked.

This is important for those of us in supply chain for one reason — inventory and operational costs. This is just one more pain point our companies and clients will be dealing with — how to do more with less.

if you are not looking at specific, tactical methods by which you can put your company more in control of its supply chain destiny, you’ve just gotten that much less valuable to your organization.

This is the kind of awareness that we are working to promote via our training and reporting practice.

Here are a few topics we’ll be touching on:

If you’re interested in more of what we can do, stay tuned for more from this blog!

Filed under: Financial Performance, JDA Demand, JDA Fulfillment, JDA Reporting, Planning Mindset, Supply Chain, Working Capital, database, improving employee performance, technology, training | No Comments »

I know we spend a lot of time discussing our work around JDA Supply Chain Training. Hey, we’re just trying to tell the world what we do!!However, the reason that we’re able to provide, what I believe to be a strong set of training templates is due to one reason — we know what it takes to make a solution work. We’ve worked with these solutions, we’ve implemented these solutions, we’ve had to “tune” these solutions in the field while they are in operation — talk about changing your underwear on a roller-coaster… Its not often that I find books on supply chain that really provide a level of insight into a specific area of supply chain practice.  I did just that a few years ago and I’d like to share the title of this book with you.This book is titled, “Modeling the Supply Chain” its author is Jeremy F. Shapiro (a link to the book is embedded in the book’s title). The ISBN is 0-534-37363-1. The ISBN is linked to the ISBN database which gives you a few more options for purchase (and insight). I spent a few great years working with some very smart supply chain “gurus” who lived and breathed supply chain management. One of them, Paul Bender, was notorious for being able to look at a problem and simplifying it in one shot.Reading this book about modeling the supply chain around a strategic or tactical optimizaiton problem finally gave me the insight I needed. What it did was help me “frame” the problem. It helped add to my knowledge and I know it’ll do the same for you.Before I go, here are a few of the things I’ve learned over the last few years about these solutions off the top of my head

• An optimization model has about a 250 item limit — I am not sure how this stretches with 64-bit architectures. All it means to you and me is that modeling all your SKUs is a non-option. Use your Reporting tool to aggregate your items, locations, customers, etc. to logical groupings that make sense
• Break apart your problem into parts, domains and solve them logically and sequentially (see my comment on “aggregation” above)
• Be ready for apples to oranges comparisons in sensitivity analyses. Its doing math, not lining up the spreadsheet. Make sure you know the data so you can understand the nuances of change.
• Understand your objective: Reduce Cost, Increase Margin, Increase Revenue, etc. 
• Know that 85% of the project will involve alignning the numbers. If you cannot produce a baseline that gets you close to your financials or actual results, good luck with the optimization runs!

 The reason I wrote this (and the title) is this. If you don’t accept these element as somethign close to fact, you and your consultant will be working together until you run out of budget. Make sure — at all times you know what you want to accomplish and if you have more than one thing…. prioritize them by importance, financial benefit and cost/benefit relative to level of effort.�

Filed under: Strategy, Supply Chain, training | No Comments »

I am not sure if we should call this “organizational heredity” or some other term.  Regardless, we have found that when we have two populations of users to train; (1) supervisors and (2) the employees for whom the supervisor is responsible, we observe a interesting but consistent phenomenon.  Here is how it goes…

As part of the feedback loop we provide our clients, when we train and quiz the supervisor, we can determine the supervisor’s “weak points” in the content we deliver.  To supplement these weak spots, we work with our clients to generate “refresher content” for these supervisors. We find that this is critical – you’ll see because of our observations.

When we deliver that same training to the supervisor’s employees and rate their performance, we find that when we aggregate the results of the employees’ performance, in most cases the weak points of the supervisor are the weak points of the employee group as a whole.

Learning lesson?  No – its not that the section with which they had issues was poorly formatted (we sampled enough companies for that). The less on is that it isn’t outside of the realm of possibility that the people who “onboard”, coach, and train employees will focus on where they are strong and dance around where they are weak. Without re-enforcement, managers will see that the performance “apple” does not fall that far from the supervisory tree.

That is one of the components of our training framework.  We understand that this is bound to happen and we work with our clients to manage through this.

If you’re trying this on your own, make sure you take this into consideration.

Filed under: eLearning, improving employee performance, training | No Comments »

The way I see it, planning from a rear-view mirror is not the same as gaining insight from the business and market as to where their business is going.  CFOs do provide forward looking guidance, but for the most part they’re dealing in reports around what’s happened. Yes that’s what I said and I mean it. I’ve been working in, implementing, and designing supply chain software tools and business processes for more than ten years and the one thing that I can tell you is this:

Nine times out of ten, the businesses (and senior business executives) who really value their forecasting team are the business who succeed.

Everything you’ve learned in business school around managing an ongoing business, especially understanding where the market is going and a product line’s stage in the product life-cycle have less to do with reports and more to do with forecasting.Here are a few of the observations we took away during our research:

• They Really Look: Great forecasters know how to scan their company’s forecasting software for the products that matter based upon the (right) math, what the business is concerned about, and what the business should be concerned about.

• They Prioritize:  Great forecasters know how to prioritize. They have been taught or have learned what it takes to pay attention to what matters. This is critical when your forecaster is time-limited in what they can manage in a short period of time; especially when they are tempted of “their game” by the “squeaking wheels” in thier organizations.

• They Pre-Sift for What Matters:  Great forecasters understand that mountains of data and reports mean nothing – save their ability to distract.  The good ones understand that in order to be successful, the information has to be “actionable.”  These people are not afraid to wade into their company’s database with their reporting teams and come up with the “dashboard-like” reports that call their attention to the products, regions, and channels that need attention.

I am in the process of building out a free onlinelesson about what to focus on to become the kind of forecaster your CEO can rely upon (and notice in a good way); if you’re interested, let meknow and I’ll include you in the “beta” viewing audience so I can getsome feedback.  If you have any input, I’d welcome it as well.  Send your comment or requests with “Forecaster CEO” to info@turnswing.com or just drop in a comment on the blog.

Filed under: Forecasting, JDA Demand, Supply Chain | No Comments »

When I was sixteen, I wanted my driver’s license and I didn’t want to wait. There were places to go, things to see, I didn’t have time to wait.  What I really wanted was for someone to slide a license across the desk, walk me over to my [Dad’s] car and rattle off a few facts to me: such as:
“…over here is the gas pedal; here is the brake; and these three things here, they are your mirrors; from time to time, objects in the side ones are larger or closer than they appear.  ‘Stop’ is an important sign and get used to this whole traffic light concept.  Oh and in case you forget, here’s a binder of things you need to know in order to use the car.  Enjoy!”

So… that didn’t happen for obvious reasons. I needed a lot more: most new drivers do.  I needed training, skilled coaching, and practice in a controlled environment.  Most parents of a 15 or 16 year old would cringe at the thought of my wish being a reality.

Ironically, it is often those same people who will easily allocate thousands of dollars of their company’s money to have their planners or forecasters sit through a week of training (or more) on the features and functions of software and (of course) “the binder of all the other things you need to know to be successful.”  Yes. a 700 page binder for an overworked, planner who is constantly interrupted, and doesn’t have time to flip through anything. Yes, a 700 page generic binder to help your planner manage a multi-million dollar book of business.

These managers don’t have the time or resources to spare for intensive training; they don’t associate the feature-only training with the lack of performance they see in their planners. When they do see a decrease, they throw up their hands and say, “well, what else can I do? We’ve sent them to training at the vendor.”

Don’t fault the vendor too much – customers haven’t looked hard enough either at what they’ve been getting. To be even fairer, feature-function used to be enough.  Really. 

There was a time when the people who signed on to some of these projects (supply chain planning as an example) were visionaries. They were pioneers in defining processes so that was enough for them – they took it from there. This is not the case today. Many projects, upgrades, or even “refreshes” are managed not as strategic projects, but as “must do line items” with very, very tight budgets. No one can afford anything but “off the shelf” offerings from a vendor.  Further, the planners and visionaries have moved on and in their place are planners who just want to do their jobs very well, and go home.
Our flavor of training is different – because we researched this space and decided to do something about it. 

Filed under: Supply Chain, eLearning | No Comments »

Washington, DC, February 1, 2008 – Turnswing, a consulting and services firm, is launching an eLearning and Certification Service. 

The eLearning Service will be focused on the planner and forecaster population within Turnswing’s supply chain consulting base around the supply chain products from JDA Software Group (the suite of products formerly known under the “Manugistics” nameplate).

“The elephant in the room,” according to Turnswing CEO Vince Wicker, “is the fact that most of the people that we’ve worked with in the past five years are moving on, either due to promotions, new companies or retirement.  Not only is there a Baby-Boomer-driven demographic shift taking place, no one’s really focused on making the planner a better planner.  I’ve been with them; I know where they struggle – especially the new ones. Our team is committed to clarifying not complicating things. We’ve even stopped calling it training –it’s on-line, on-demand, coaching.”

“This is in no way a competitive offering to the training offered by the vendor [JDA Software]” stated Mr. Wicker. “This is a complimentary offering.  Our focus is on the planner – the current planners who need to know how to generate a better plan as well as the new planners being on-ramped into the organization.  Our courses pick up where standard software training leaves off.” 

Turnswing’s eLearning service will be comprised of a combination of user and course types packaged and priced for individuals and organizations.  For all the consulting related to its eLearning services, Turnswing will charge a flat rate; no hidden fees like those commonly found with other vendors. This covers deployment, customization, and updates for business changes and upgrades. 

For a discussion of the catalog of current and upcoming courses please see www.turnswingstudios.com for more information.

Turnswing’s Certification Services are technology-agnostic and include topics ranging from regulatory to policy certification for employers and employees.These services can be delivered on-line with company-specific, or individual licenses (depending upon needs) or via “on-premises” via client site licenses .

Contact: Mike Wayne, Turnswing, Inc. 866-856-5686 or mike.wayne@turnswing.com

Turnswing, Inc is a consulting and services firm based in Barrington, Rhode Island with offices in Alexandria Virginia.

JDA and JDA Software are registered trademarks of JDA Software Group

Filed under: eLearning, press releases, technology | No Comments »