Forecast/forecasting supply chain coordination

Corrective action Effective integration of SCM in the organization Proper supply chain coordination Efficient interfaces Effective cooperation and coordination with 3PEs High customer satisfaction Accurate forecasting Satisfactory lead and transit time... 

A key point from the Red Tomato supply chain examples we have considered in this chapter is that when a firm is faced with seasonal demand, it should use a combination of pricing (to manage demand) and production and inventory (to manage supply) to improve profitability. The precise use of each lever varies with the situation. This makes it crucial that enterprises in a supply chain coordinate both their forecasting and planning efforts through an S OP process. Only then are profits maximized. 

Negotiation Agent. Negotiation Agent will be activated by the user, when it is considered appropriate by the latter, from the interface of the developed tool. When it is active, it will allow the management of forecasting demand in the supply chain in a coordinated way through collaboration between Shop Retailer and Retailer, on the one hand, and Wholesaler and Factory, on the other. 

Grocery retailers have to carry store inventory to satisfy retail demand over the supplier lead time to ensure high in stock levels. Thus, retailers have to forecast demand at price levels offered. As discussed in the chapter on coordination, in an uncoordinated supply chain, double marginalization results in a lower retail service level than is optimal for the supply chain as a whole. 

This shows that improving lead times and enabling decisions under a lower demand forecast error may require coordination agreements between members of the apparel supply chain. Once such coordination agreements are estabhshed, the access to manufacturing capacity closer to demand enables improved competitiveness of the apparel supply chain. Notice that all four Cs played a role in improving the supply chain. 

It is important to remember that every forecast will be wrong. Forecasts are always a prediction of the future. It is random luck if demand actually equals the forecast. As shown in Figure 8.1, there is a distribution of probable demand around the forecast point. So, a good forecast includes not only an expected amount, but also the probable range as shown by the distribution. The reason we make the forecast is to coordinate between all the functions and firms in the supply chain. To help coordinate the supply chain the forecast needs to be reasonably accurate. In the next sections we will consider some simple forecasting methods and some simple methods to evaluate the accuracy of the forecast. 

One advantage of a tight, highly communicative supply chain is that the production plan is based less on a forecast and more on actual demand. In tightly communicative supply chains firms may share their production plans with each other to encourage coordinated planning into the future between all of the members of the supply chain. In this type of environment it is much more likely that all sources of demand have been accounted for and there will be no surprises that upset the production plan. 

For many, this view must remain a remote hope. For these companies, their supply chains are too long most of their sales are at Christmas or other peak periods there are too many players to make coordination feasible and, in addition, their crystal ball forecasts are not accurate enough to be successful. 

Yang WS, Ma SH, Li L (2004) Coordinated planning model based on response time of supply chain. Forecasting 23(5) 52-56... 

For many, this view will remain a remote hope. For these companies, their supply chains are too long most of their sales are at Christmas there are too many players to make coordination feasible and, besides, their crystal balls won t produce the accurate forecasts needed to be successful. ITowever, those who are successful in managing their supply chains will make this transition. In the following sections, we ll trace the evolution of this transition from batch to flow and some of the enabling methodologies that work in many supply chains. We believe that companies with "uncontrollable" external barriers like seasonality can also tailor these methods to make life easier. 

In the model, JMI starts with a heavy emphasis on joint planning and coordinated execution. POS data is more central to the processing, down to its use in trend analysis, micro-marketing, and micro-merchandising opportunities. There is a time-phased element to sales forecasting that helps planning and execution of fulfillment across the total supply chain. 

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