When Predictive Analytics is Just Forecasting

The term Big Data and Predictive Analytics are quite the rage these days. Colleges and universities are offering degrees in analytics. Consultants are offering services and dashboard software to help their clients be on top of their Big Data and Analytic game. Companies are creating Analytic departments led by either managers, directors, and even VPs. There is a fair amount of buzz in this area.

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Small Company Supply Chain Challenges

Smaller companies face the same issues as bigger companies. This applies probably as much or more to the supply chain as any otter function. They have to process orders, ensure quality, solve problems, expedite inbounds and outbounds, and this must all be done at the least possible cost. We have written about the multi-criteria optimization problem that is the Supply Chain. The complexity and trade-offs apply to both $50 billion multi-national corporations and $5 million companies with one office, plant, and warehouse location.

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ERP and Excel: Part I

Excel is an indispensable tool in modern business. We use it every day. We use it in varying degrees of deftness and aptitude. Some of us use it as a giant calculator while others take advantage of functions, pivot tables, macros, and visual basic. We use it to handle small amounts of data to creat files so large they exceed the limits of some email services (thankfully there is dropbox and other file sharing applications). We use it to draw all kinds of graphs. We cut and paste part of spreadsheets and graphs from Excel to Word and PowerPoint. As helpful and indispensable a tool as Excel is, there are good uses and there are certainly abuses. For purposes of this posting, we will consider the use of Excel in conjunction with ERPs. ERPs such as SAP and Oracle are designed to manage, in a connected way, the transactions of a business. They provide an integrated data structure from transactions to the general ledger to financial reporting. The main benefit from our perspective is data integration and allowing the system to handle the bulk of the transactions and people to manage exceptions. The people then work to minimize the exceptions over time through process improvements and sound data management.

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Back to School ... Back to Work!

It is Back-to-School sale time. There are advertisements for the office superstores and the big box retailers. The goods that line the shelves, end aisle displays, and floor displays were ordered back in April and May. The goods were shipped in May from Asia and June for the goods still produced in the United States. Back then we were still in the belief that we were still in a recovery.

On August 12, it was reported that July retail sales (excluding autos) were up 8.5% from July 2010 but essentially flat from the June results. On the same day, the Wall Street Journal reported that economists that they have surveyed predicted that August sales would be the second month in a row with flat sales performance. The title of the WSJ article was “Heading Back to School, But not to the Stores” which basically sums it all up.

On August 16th, there is an article from the AP that Wal-Mart and Home Depot are upgrading their profit outlooks for this year. As we have pointed out in this blog, The Great Recession forced many companies to lean up. They have had to tighten up their planning and inventory management. They have learned to operate with less employees and adjusted the product offering and mix to cater to more and more value conscious consumers.

Retailers also have learned from 2008 when they wound up with piles of unsold merchandise that they had to discount up to 80 percent or sell to liquidators for pennies on the dollar. Some of their peers, including Circuit City, shuttered. In fact, several retailers that have survived the Great Recession by cutting costs, keeping inventories lean and pushing either low prices or high quality are reflecting confidence going forward.

Basically, with flat sales Wal Mart, Home Depot, and others are able to improve their profit outlook on flat sales.

Are you able to do the same?

The key is to tightly manage planning, inventory, and personnel.  Things our clients have been doing since the start of The Great Recession.  Any business that has survived The Great Recession has probably done this to some degree.

We believe that this is a never ending activity.  An important part of the Lean philosophy is Continuous Improvement.  Planning parameters and inventory levels must be constantly challenged, tweaked, and updated to allow your business to operate in its most efficient state.   Even if your business is not retail, evaluating your product offering is must be done with equal vigor.  Lastly, and unfortunately for the economy at large, employment must be tightly managed at well.  We are seeing an increase in hiring freezes and outsourcing of support functions.

Sound planning and optimized inventory can be achieved.  With a tool like DemandCaster and our process, this can be achieved in less time and with less people than you might think.

What are your current planning and inventory challenges?  Post them here or send us an email, we would love to discuss your challenges and suggest opportunities for improvement.

Working effectively and efficiently, we will persevere!

You may have seen my post on Twitter yesterday … Back-to-school worries weigh on teen retailers. 

800 Pound Gorilla

What is an 800 Pound Gorilla?  Well as this blog is not about biology or animal species it is safe to assume we are not talking about the Western Lowland Gorilla, the Eastern Lowland Gorilla, the Mountain Gorilla, or any other Ape Family in the Animal Kingdom. We are talking about a small sub-class of Homo sapiens whose natural habitats are corporations and other organizations. 

Yes, we are talking about people. They do not resemble Gorillas in any physical manner.  Nor are these “800 Pound Gorillas” necessarily obese as the weight reference alludes.  No, we are talking about a class of people, men or women, who are adept and skilled at getting their own way in organizations. The name comes because we generally assume that an 800 Pound Gorilla usually gets his weight in the Gorilla world.  It may be a little offensive to gorillas but this is a common name given to corporate bullies.

The 800 Pound Gorilla is often the leader of an organization. It could be the CEO, President, General Manager, VP, Director, Manager, and even Supervisor.  In his realm or span of control, the 800 Pound Gorilla is dynamic and forceful. The 800 Pound Gorilla gets his way through force of personality and often by intimidating those who oppose his point of view.

However, not all 800 Pound Gorillas are leaders. They might be natural leaders in a group or milieu where the actual leader may be the exact opposite of an 800 Pound Gorilla. More often than not, this sub-class of 800 Pound Gorilla is very knowledgeable and uses that knowledge as a club. There are also cases where these 800 Pound Gorillas are right and wrong. 

The term 800 Pound Gorilla is not a positive term. They are, as in the above matrix, senior executives who throw their weight around and are often wrong, the term Gorilla is not often used for leaders that impose their will and are always right.  We tend to call these leaders great and visionary.

At Cadent Resources, we are concerned with Demand Planning and Inventory Optimization. We see 800 Pound Gorillas mostly in the area of Demand Planning. These 800 Pound Gorillas insist on revising forecasts upward into what they “believe” the sales will be. In most cases the Gorilla is wrong. If the 800 Pound Gorilla is the CEO, President, VP of Marketing, or VP of Sales there is not much the demand planning team can do. There is also not much a well crafted S&OP process can do. The 800 Pound Gorilla gets his way and the Demand Plan is compromised.

If the Demand Plan is compromised too often, no one will want to play and the S&OP process will unravel. The entire effort will become ineffective. In fact, the best S&OP programs work when senior executives become Gorillas with the intent on making S&OP work.

We invite you to share with us your experience with 800 pound Gorillas both good and bad. Are you a Gorilla? Be honest.