New Approach to Supply Chain Planning Includes End-to-End Probabilistic Modeling

ToolsGroup, a provider of demand-driven inventory optimization solutions, recently announced a new type of supply chain planning (SCP) solution, which incorporates probabilistic modeling across all main supply chain planning functions.

The SO99+ SCP solution, permits the probabilistic (or stochastic) nature of the supply chain to be integrally modeled in all of the SCP functions, including demand forecasting and planning, inventory management and optimization, and replenishment and transportation planning.

The company points out that most supply chain planning suites have used deterministic APS (advanced planning and scheduling) logic but with recent supply chains demands including are shorter product life cycles, product promotions, longer supply lines, and the current economic uncertainty, a disconnect is created between these deterministic models and real life supply chain behavior. Rather than constantly adjusting and tweaking to accommodate the randomness of the supply chain, this new system directly addresses the stochastic supply chain behavior.

The solution also addressed the problem of intermittent or "lumpy demand." Demand buckets are getting smaller as product proliferation creates more alternatives and shorter replenishment cycles create more time slices. A recent ToolsGroup analysis of eight branded companies found that typically more than 70% of their SKUs were in the lumpy demand category.