Alan Milliken

Folks, we must constantly remind ourselves that “process” takes precedence over “technology” and technology should be designed to enable best practices. During the e-revolution many of the process best practices were first identified by those designing demand planning software. For example, the ability to identify exceptions to pre-defined rules in real-time and instantly issue alerts to planners. This best practice was in place before technology. However, technology is advancing and being embraced so rapidly that it often dominates our processes by default. That is, our people are not keeping pace with the knowledge, education, skills and abilities via objective training required to leverage the software. In many cases this has led to sub-optimal processes for planning and forecasting, where systems are wrongfully blamed for failure.

As the Business Process Education Manager at BASF I often ask my students which of the three components of operational excellence (People-Process-Technology) controls overall success? Unfortunately, some answer our ERP system. Many of us are asking; do we really run our ERP system or is it running us? The latest advancements in ERP software provide high power heuristics that can automatically calculate order quantities, safety stocks, maximum inventory levels, etc., based in part on demand forecasts. Priorities and trade-offs can be managed by the system. However, the objectives and associated rules are determined by people. Therefore, how effectively we deploy new processes and systems relates directly to the knowledge and skill of our people.

We must act now to avoid the “Terminator Syndrome” (Systems and machines taking over). Our people can make the difference in whether technology or process receives priority.  But, to do so they must be educated and trained in planning processes and then how the latest software enables planning. For example, if a Demand Planner does not understand how the software creates the forecast or the recommended safety stock related to forecast error, they cannot contribute to improving process performance.

We all agree that more emphasis is needed on what is best overall for the firm. For example, we want to leverage our S&OP processes to maximize the value added to the bottom-line. Software firms have responded by providing advanced tools that can simulate and optimize demand & supply plans across the business. However, we must ask if our employee skills are keeping pace, particularly in process best practices and quantitative methods such as time series forecasting, causal modeling, statistics, and more. Furthermore, internal collaboration and teamwork is now recognized as most important to business success since technology has enabled a much more integrated approach to planning. What is your firm doing to prepare employees to contribute in this new environment of the system and machine?

The Institute of Business Forecasting & Planning, IBF is the leader in providing S&OP, Demand Planning and Forecasting education & training. The breadth of the IBF program includes understanding these processes from a strategic, tactical and operational perspective. For example, their conference presentations include how firms are using demand planning to improve business performance as well as tutorials on how to better perform specific tasks. Participants learn both technical and personal competencies needed to succeed in today’s fast-paced, ever-changing environment. For the Demand Planner, the Certified Professional Forecaster (CPF) program provides the knowledge and skill needed to contribute to process design and system configuration.

– Want to discuss the latest technology trends with software providers on the leading edge?
– Want to hear how successful firms leverage people-process-technology to improve performance?
– Want to learn how to design planning processes and configure software to enable best practices?
– Want to prepare yourself to better contribute to your firm’s success?

Attend the IBF’s Best Practices Conference in Orlando, October 24-26, 2010

Alan L. Milliken, CFPIM, CSCP, CPF
Business Process Education Manager
BASF Corporation

About Alan Milliken:

Alan Milliken is Business Process Education Manager for BASF Corporation. He has extensive experience as a practitioner, consultant and educator in supply chain & operations management. Alan spent over 20 years at major manufacturing sites serving in production, logistics, process control, operator training, and scheduling. He has spent the past 15 years as a business process consultant and educator. Alan served as a subject matter expert on the teams that created the Certified Supply Chain Professional (CSCP) program for APICS and the Certified Professional Forecaster (CPF) for the Institute of Business Forecasting & Planning, IBF. He holds an engineering degree from Auburn University and an MBA in Management from Clemson University.

See ALAN MILLIKEN Speak in Orlando at IBF’s:

$795 USD for 3-Days including Advanced S&OP Forum!

Keynote Speaker Cliff Engle, SVP Fender Musical Instruments Corporation at the 2010 BOTB Conference

And of course, no one will be able to bring up the 2010 Best of the Best S&OP Conference without mentioning the outstanding performance by well known guitarist Greg Koch along with his Fender colleagues during the IBM/Cognos cocktail reception. I cannot think of the last time I was at a business event, where I heard someone in the audience yell “Free Bird” while I was speaking on stage. As if that was not enough, Fender was incredibly generous to the BOTB attendees and gave away a guitar! It was truly over the top.

Through IBF’s collaboration with the APICS team, we have formed an event unlike any other. The meshing of these two organizations, which are passionate about delivering educational yet fun events in order to grow the field of supply chain and demand planning has resulted in the production of a high level and memorable event. I feel that our speakers have communicated an overall sense of enthusiasm and support for their fellow industry professionals. We were fortunate to be able to lasso this group together in the name of offering professionals the knowledge they need to go back to the office and create change.

Check out flip video footage here on the IBF Demand Planning You Tube Channel:

Constance Korol is the Senior Marketing Manager for the Institute of Business Forecasting and Planning (IBF). Follow her and the IBF team on Twitter: http://twitter.com/demandplanning

Photo credit to Hwa Kim, Photographer, APICS

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

When you come to a conference, all you want is to talk to as many people as you can so you can learn what everyone else is doing and learn from them.  Speaking with one attendee, they shared how in their group, there is only four demand planners, spread across the globe.  The benefit of attending events like the IBF Best Practices Conference is that you are now in a room with hundreds in the same position.  But still, how to talk to as many as possible?  How about some speed dating!  So that’s what about 100 or so attendees chose to do with the late afternoon session at the conference.  We were broken up into several different groups each with a different topic to discuss. We worked our way around the room a few times so that we would have a chance to discuss the topics we were most interested in. Each topic was led by table monitors.  With so many great topics to choose from, it was a hard decision, but  I chose to head  over to the JDA led table first and listened in on the discussion about “Improving forecasting and planning with consumption (POS) and syndicated data” led by Danny Halim.

The group quickly began sharing how they are all ‘trying’ to use consumption data in their demand forecast.  Digging deeper into the reason for the repeated use of the word “trying”, several issues came up regarding the reliability of  POS data.  Several fellow date-ees shared their systems for cleaning the data, or merging several different sources to make it more comprehensive.   Some companies manually merge them together, while others have built complex systems to forecast inventory levels based on POS data provided by major retailers such as Walmart. It is essential to find a system that works to clean the bad data in order to make it usable. The phrase ‘garbage in, garbage out’ was used frequently although I would say these daters were real pros at sharing and I found myself  not  wanting to get up and move on to another table as the discussion was really exciting.  I hope to see some break-out sessions on this topic at future IBF events.

I headed over to the next table where the topic was “what forecasting system works best for you”?  All daters were sharing at first was whether  their organization goes top bottom or bottom up.  Not to be left out, there were also a few working from the middle out.  The demand forecasting world does not discriminate and accepts all creeds! Two daters shared that their group does both (bottom up and top bottom) and then reconcile the forecasts.  Another shared how they begin with a price line item forecast then dollarize it by working with the marketing team and use this to drive the financial forecast.  To do this, they create assumptions upfront on the industry, start with a baseline and use this target for demand planning functions.  Not everyone  shared happy stories of their forecasting process.  One person explained that their sales department does not participate in providing input into the forecast, event though they are the closest to the demand and the customers..  The ideas presented in the Keynote Presentation by Gerry Fay of Avnet EM Velocity came up as ways to combat some of the issues the table faced. Some of these were demand sensing and responding, and command and control.  A few other different approaches presented were forecasting at the SKU level then weighting forecasts by different group functions at certain levels depending on the timing, conflicts with upper management when they do not see what they want in the forecast, forecast ownership and having the sales team provide forecast as a change in trend, rather than level.  Again, when table switching was called for, it was hard to leave but by this point everyone was so warmed up to sharing I looked forward to seeing how the last table would go.

Our last group date was led by Mike Gilliand of SAS and we talked about “new product forecasting”.  Around the table the range of new products spanned  from 5-40%.  Forecasting by analogy is the method most commonly used for new product forecasting.  The focus on the higher levels of uncertainty and risk were brought up, and the strong need to make sure management realizes this as new products roll out.  Also, the importance of tracking past new product forecast reports was part of the discussion as well.  Is your sales team consistently over-shooting? Keep this in mind.  One major takeaway was to make sure and track what assumptions were used when you are making the forecast.  If you carefully track these, it will assist in making the forecast better and help the team in the long run.  The general consensus of the table was that it takes roughly six months, for the most part, to know if a new product is going to succeed before entering it into the standard S&OP process for the organization.

And with that, speed dating was done and all minds were racing.  The level of sharing within the group continued to grow and we all moseyed over to the cocktail reception where the speed dating conversations continued and mini-crab cakes, succulent ripe California strawberries and JDA signature martinis were our award for being such great daters and sharers of demand planning lessons.

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.

Fred Harried

Rakesh Sharma

“We will what?” I had heard it. We will be doubling shipments in the next 4 months, and this was just the beginning. I cannot say I wasn’t excited. It felt good. Volumes going up.. Its a good problem to have.

But the memories of demand sliding unexpectedly were etched clearly in my mind.. Customers pulling off orders and the “so called” demand going.. kaput.. And we were left holding the bag of tons of inventory.. Clearly, we couldn’t afford that.. I mean that would be catastrophic for a small company like us.

I remember Rakesh and I chatting about the general landscape of Operations over a sandwich. Can we change the world of Ops? Is it possible that a small company like Ruckus Wireless could take on its bigger rivals, with much lesser resources and buying power? Could we create the right set of processes, and equip the Ops team with the right set of tools (without breaking the bank)? Processes and tools that could help us walk this tight-rope, prepare forecasts and “truly” understand the “demand” behind it?  And if we could not understand demand, just make sure we arm the team with the right information and insights so we can succeed most of the time?  And get our customers to embrace and cheer for us during worst case scenarios?

At IBF’s San Francisco conference this month, we look forward to sharing our journey with you.  This includes how we went on to build an Operations model and processes that is purpose-built to respond to customer demand and changes, while keeping a tight lid on costs. It will be wonderful if you join us.

If you have any thoughts, questions we would love to hear from you. Please drop us a comment.

Fred Harried, Vice President, Operations
Ruckus Wireless

Rakesh Sharma, President
Zyom, Inc.

See FRED HARRIED from RUCKUS WIRELESS & RAKESH SHARMA from ZYOM Speak in San Francisco at IBF’s:

$895 USD for Conference Only!

April 28-30, 2010 (3 Days)
San Francisco, California USA

Jonathon Karelse

Demand planning and forecasting is a process which, because of its intrinsic focus on “error”, too often invites misguided efforts at producing perfection.  Like the alchemists’ quest for gold, the goal is illusory and may cost more than any benefit it yields.  Consider that the result of demand planning is only profitable to the extent that it is actionable – that is, if links above or below in the participant’s supply chain are unable to respond to the data, it might be a purely academic exercise.  Consider further that if the participant’s supply is already near-optimal, the benefit of any marginal incremental gains might be offset by the disproportionate effort required to effect those gains.

The idea of diminishing marginal returns is one which is easily understood as a concept, but too many forecasting and planning practitioners are anathema to their raison d’etre within an organization.  And the mandate for forecasting perfection is often created by senior management; the very group who should be most aware of the cost/benefit of their organization’s activities.  Any case for imperfect forecasting, therefore, must ultimately be underpinned by an incremental benefit.

The process that we undertook at Yokohama Tire (Canada) was as follows:

1. Clearly identify the problem and demarcate the extent to which its resolution is actionable.
2. Estimate the cost/benefit of its resolution and clearly apply a financial metric.
3. Evaluate judgment inputs as a means to that end. By making use of existing business intelligence and ability which may not have been leveraged fully in the process, we precluded the need for additional investment in software, consultants or headcount.

During my upcoming presentation session at IBF’s San Francisco event at the end of April 2010, I will share the means by which we addressed each step of this process and, I hope, allow participants to learn from and avoid some of the mistakes we made along the way.

Of course, we would enjoy hearing your lessons learned on improving forecasting accuracy here.  Looking forward to continuing a dialogue.

Jonathon Karelse
National Marketing Manager
Yokohama Tire

See JONATHON KARELSE from YOKOHAMA TIRE Speak in San Francisco at IBF’s:

$895 USD for Conference Only!

April 28-30, 2010 (3 Days)
San Francisco, California USA

Joseph Stackhouse

Eighteen months ago I decided I would put my job on the line if that is what would take to improve our planning processes and implement S&OP. Due to the changes required, some implementation issues, and my own actions; I must admit that I came very close to that line.  Fortunately, I survived and in the process learned some valuable lessons. We did get a few things right, but those aren’t nearly as fun to talk about.

The S&OP effort required significant change in management. We spent some time getting aligned with our leadership team, but clearly it was not enough. In hindsight, I kept on moving forward even though few were following.

We had some implementation issues with our system. Data is always a challenge in an implementation like this. We suffered with data because we didn’t get in front of it fast enough. We also suffered by over-engineering, both the system and the processes. In trying to please everyone, we pleased no one.

On several occasions, I realized that I would have been much more effective if I had taken the time to be empathetic. Not taking the time to build relationships and connections cost me significantly more time later than the few minutes I saved on the front-end. So, I hope to share a few things in San Francisco on some of the softer skills needed, particularly empathy.

I did get to keep my job so things turned out alright.  I will now be leading the implementation of our ERP implementation for the division. Again, there’s probably many lessons learned you can pickup from my journey.

Have any of you been through a similar experience? We would enjoy hearing your comments and sharing a dialogue.

Joseph Stackhouse
Director, Supply Chain / Operations
Land O’Lakes Company

See JOSEPH STACKHOUSE from LAND O’LAKES COMPANY Speak in San Francisco at IBF’s:

$795 USD for Conference Only Group!

April 28-30, 2010 (3 Days)
San Francisco, California USA