Banish Forecasting Errors, Overstocks and High Logistics Costs

Dec. 23, 2011
At this very moment in your supply chain, what is the current demand for any given product? It seems like you would need a magic wand to answer this question. I mean, how is it possible to know what customers in your market are buying right this moment, ...

At this very moment in your supply chain, what is the current demand for any given product?

It seems like you would need a magic wand to answer this question. I mean, how is it possible to know what customers in your market are buying right this moment, so that the information is signaled back through the entire supply chain?

This is the kind of information that would allow suppliers to provide even better orders and deliveries that respond to real-time information versus fallible demand forecasting. With this kind of information, you could avoid pitfalls like late shipments, overstocking, and unnecessary transportation costs.

It is possible through Supply Chain Transformation and it's not a magic wand. By using sales and operations planning, aligned organizational structures, and the right technology, it's possible.

For example, let's say you are in the dog food business. Right now, a customer in the grocery store is walking down the pet food aisle with a coupon that she intends to use to buy four bags of puppy chow. After she makes the purchase, a signal goes down your entire supply chain that drives back to the distribution center (DC).

As more customers come into the store with the same coupon, real-time data is sent back to the DC. In an operational process that is as close to custom as you can get, this data "tells" the dog food supplier to re-stock that particular store's puppy chow inventory to make up for the increased demand.

True, the DC may have to deliver more often to the store, but it's not deliveries based on forecasting of what might happen in the market. It's deliveries based on what is happening with customers on the demand side.

Supply Chain Transformation means supply management and demand planning that leads to excellent customer service and reduced costs for suppliers. As a nice bonus, supply chain transformation also makes forecasting errors a thing of the past.

What moves is your company making to transform supply chains?

Jim
Tompkins Inc.

About the Author

Jim Tompkins | CEO

Dr. James A. Tompkins is an international authority on leadership, logistics, material handling, outsourcing, and supply chain best practices. As the founder and CEO of Tompkins International, he provides leadership for Tompkins globally.

His 30-plus years as CEO of a consulting / integration firm and his focus on helping companies achieve profitable growth give him an insider’s view into what makes great companies even better. Listen to an interview of Jim Tompkins on the Business Leader Radio show.

As a high-level business advisor, his unique perspective prepares corporations and executives for the future.

To share his knowledge and provide up-to-date information on supply chain and business trends, he developed the GoGoGo! Blogand Global Supply Chain Podcast.

He has written or contributed to more than 30 books and eBooks, including Caught Between the Tiger and the Dragon, Bold Leadership, Logistics and Manufacturing Outsourcing, The Supply Chain Handbook, andNo Boundaries. Jim has been quoted in hundreds of business and industry magazines such as The Journal of Commerce, Supply & Demand Chain Executive, and FORTUNE, and he has spoken at more than 4,000 international engagements.

Jim has served as President of the Institute of Industrial Engineers, the Materials Management Society, and the College-Industry Council on Material Handling Education, and Purdue has named him a Distinguished Engineering Alum. He has also received more than 50 awards for his service to his profession.

Sponsored Recommendations

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!