As we\u2019ve talked about in class, forecasting is very important for companies to improve supply chains, leading to overall success for the business.\u00a0 We\u2019ve learned about a lot of different methods that companies can use to forecast.\u00a0 It is then up to the managers to analyze the results of the forecasts to create successful inventory strategies.\u00a0 Unlike in class, this process does not always have a correct answer, and it turns out in real life, managers are not always the best at interpreting forecasts correctly.\u00a0 In the article at the bottom, Lora Cecere, the Founder of Supply Chain Insights, explains how forecasting is a problem for many companies.\u00a0 She explains how companies invest a lot of money into constantly improving forecasting methods.\u00a0 Once they get the forecasts, managers do not know what to do with the results, so the inventory strategies are not improving at all.\u00a0 Without improving inventory strategies, the companies are not any more successful.<\/p>\n
Cecere says the problem is the obsession with improving forecasts.\u00a0 There is no point in improving the forecasts if managers don\u2019t even know what to do with the forecasts in the first place.\u00a0 No matter how many improvements are made to forecasts analyses, no forecast will ever be 100% accurate, so beyond a certain point, the benefits of forecasting are marginal.\u00a0 Instead, companies need to better train managers on how to use forecasts to create better inventory strategies.\u00a0 This is something that is easier said than done, especially in today\u2019s changing market.\u00a0 Cecere explains that in the past, safety stock inventory was the main focus, but that is changing as the market is becoming more ecommerce-based.\u00a0 The rise of ecommerce has made inventory design harder because it requires more complex logic on things like batch sizes and production sequencing.\u00a0 As a result, Cecere believes cycle stock is important than safety stock when it comes to inventory design.\u00a0 To correctly design cycle stock, managers need to use technology well, although this can lead to more problems since technology is often difficult to implement.\u00a0 Cecere believes that companies would be better investing time and money to teach managers how the inventory technology works rather than throwing away money on improving forecasting results.<\/p>\n
Overall, there are clearly benefits to using both forecasting analyses and inventory design methods.\u00a0 Yet, there is only so much benefit a company can get out of improving their forecasts.\u00a0 At a certain point, there needs to be an investment in implementing better inventory designs.\u00a0 Technology is a huge help but brings challenges of its own.\u00a0 Even managers who have the best intentions can cause problems if they do not know how to correctly analyze the forecasts to design successful inventory strategies.\u00a0 That is where consultants like Lora Cecere can be a huge help to companies.\u00a0 Consultants can train managers and show them how to use the technology that they need in order to have successful companies.\u00a0 Consultants specifically work to make the supply chain analyses friendlier and more useful for companies to use.<\/p>\n
Do you think it is worthwhile for companies to work with supply chain consultants to improve forecasting and inventory designs?\u00a0 Or should companies only hire managers that are competent enough to do it on their own?<\/p>\n
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