An initiative to improve short-term forecast accuracy reduces safety stocks and helps demand planners become more strategic at Procter & Gamble
Finding a demand forecasting solution that meets your needs
By Charles N. Smart
Here are a few examples of the issues and capabilities your company may need to consider in when selecting forecasting software:
Multi-dimensional forecasting: Forecasting software should allow you to "slice and dice" your data and display results according to the dimensions and in a format that is meaningful to you.
Promotion planning and forecasting: If you're in a business that sells consumer goods, where retail promotions impact demand for your products, you probably need the ability to predict and optimize the effects of future promotions. A recent study by Aberdeen Group, "Demand Management in Consumer Industries," found that companies that use "promotion optimization" solutions are twice as likely as their peers to increase promotion effectiveness in their sales and marketing activities.
Collaboration: The same Aberdeen Group study also found that best-in-class companies overwhelmingly identify working collaboratively with both internal organizations and customers as one of the most critical elements in a successful demand management program.
Intermittent demand planning and forecasting: If you need intermittent demand forecasting capabilities, this may be the most important feature in the software you're evaluating. It is also the one where you should definitely know the method the vendor uses to calculate results, because some traditionally used methods won't give you the degree of accuracy necessary for successful inventory planning.
Inventory optimization: If you need accurate inventory stocking estimates, make sure your system incorporates demand volatility, desired service level and replenishment lead time as inputs in calculating your inventory requirements.
Integration with company planning systems: Your ability to store and access demand data and easily integrate that database with your demand planning system can have a direct impact on the ability to share forecast results with other management systems. And this can affect timely business decisions at all levels of your company's supply chain.
Total cost of ownership: Ongoing support and maintenance is often the last thing you'll think about when selecting a forecasting software system, but the cost of maintaining software greatly affects the total cost of ownership. In addition, consider the turnover rates of the planning personnel using the software and the cost of training new users.
Every organization's needs are different. Once you've specified your organization's particular requirements, you'll greatly increase the likelihood of a successful software purchase and implementation, as well as satisfaction with the forecast results.
About the Author:Charles N. Smart is president and CEO of Belmont, Mass.-based Smart Software, Inc. Smart Software is a leading provider of demand forecasting, demand planning and inventory optimization solutions to mid-market enterprises and Fortune 500 corporations. He can be reached at 800-762-7899 or by email at firstname.lastname@example.org.