Tag Archive for: Lead Time Forecasting

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The Hidden Connection: Lead Time And Inventory Optimization Explained

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What is Lead Time? Why Is it Important?

Lead Time is the length of days between when an order is placed and the date the goods are available for use. The largest impact to lead time accuracy is found by comparing the expected receipt date to the actual receipt date for each purchase order. In simple terms, the variance is calculated as the absolute value of the difference [expected or requested receipt date – actual receipt date] for each line on the purchase order. These variances in days across multiple purchase orders establish the need for lead time accuracy testing and lead time forecasting.

What is the Impact When Supplier Lead Time is Not Accurate?

Suppliers provide an estimate of lead time, but these numbers are not always accurate. The differences between your expected receipt date and the actual receipt date can lead to significant costs. This is due to unplanned overstocks, out-of-stock situations, and deflated consumer opinions. Furthermore, Lead Time tracking, and Lead Time forecasting are mission-critical to the success of your supply chain.

Math Algorithms are the Key

Lead Time Forecasting, like Demand Forecasting, should use a set of math algorithms to calculate the correct lead time days to use in planning purchase orders. Also, like Demand Forecasting, the Lead Time Forecast should move up and down according to changes in the market, business influences, and seasonality of the product.
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Why is Last Year’s Seasonal Index Not Applicable Now?

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Is Your Demand Forecasting Solution Leading to Profits?

A seasonal index, or seasonal multiplier, is a figure that is used to adjust a demand forecast. It either raises it or lowers the forecast for a period of time. The result of the calculation (product base forecast x seasonal index) can be used to determine the inventory needed to support sales during that time. A holiday like Memorial Day, a season like spring, or an event like the Super Bowl is often better serviced by applying a seasonal index across the year.
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Lead Time Forecasting Video

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Lead Time is an important factor in any demand-driven forecasting or retail replenishment system. It drives your order points and helps you place orders at just the right time. If your lead time is inaccurate you will quickly find yourself overstocked or understocked.

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Is your Demand Forecasting Ready for the Year of the Monkey?– 3 Things to Check

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Chinese New Year: Its Coming, Is Your Supply Chain Ready?

Chinese New Year starts on February 8, 2016. Most retailers are familiar with Chinese New Year because every year their Chinese suppliers and factories shut down for a few weeks. Chinese New Year is a huge celebration for China and many surrounding countries. Workers head home for a much deserved vacation that can last 4 weeks or more, leaving quiet offices and empty factories. That means nothing is shipping and that can result in empty shelves or managing the cost of overstocks- if your Inventory Replenishment software bought the right products.
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7 Reasons Your Lead Time is Wrong (And It’s Costing You Millions)

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Lead Time is an important factor in any demand-driven forecasting or retail replenishment system. It drives your order points and helps you place orders at just the right time. If your lead time is inaccurate you will quickly find yourself overstocked or understocked. Are you making these common lead time mistakes that cost retailers millions?

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Are You Making These Mistakes With Lead Time?

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Lead Time is a critical link in your supply chain that can create big mistakes like overstocks and out of stocks. The industry answer to these mistakes has been Lead Time tracking. In fact, Lead Time Tracking has become a cottage industry where companies offer to track lead time and make a supplier pay a fee when they don’t conform to guidelines like on-time and fill rates.

Numerous studies have shown fines for bad behavior have made little impact toward improving business. The shocking fact from many studies is that overstocks and out of stocks occurred at an alarming rate when on time deliver and 95% + fill rates were achieved! The biggest mistakes found were the replenishment orders were placed on a date to soon or to late in relation to the days supply on hand. Sadly, most companies don’t use lead time as a key metric in their supply chain to determine an item order point. Most inventory replenishment systems today are driven by plans or open to buy spreadsheets which are top down methods to determine the item order date. There are better answers…
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Driving Backwards in the Dark Without Lead Time Forecasting

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Is Lead Time Forecasting Your Missing Link?

Lead Time Forecasting is a critical link in your supply chain. For a service-based inventory replenishment system, it is also an indispensable piece to identify when it is time to place the order. Let us review why you should tighten this link in your supply chain.

Lead Time impacts when you place an order to avoid lost sales. It also helps you avoid goods arriving early that create overstock while helping you plan better and drive better results…If you know the real lead time – you don’t, lead time forecasting solves the problem.
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Top 5 Inventory Optimizations You Voted to Improve this Year

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Hottest Inventory Optimization Goals Set for 2013

As we close 2013, let’s review the 5 most popular areas that supply chain people said they wanted to improve. Our research and resulting blog released January 7 of 2013 highlighted 5 areas you said you wanted to improve; how did you do? What areas of your supply chain improved and what areas still have opportunity?

Top 3 Inventory Management Concepts for Improvement in 2013

The inventory concepts included inventory optimization (IO), lead-time forecasting (LT), and supply chain visibility (SC). Oddly, Demand Forecasting (DF) was not one of the top 5 improvement goals of 2013, but that changed dramatically during the year. Sign up for our free blog to learn why and how in a few weeks. Below we have attached the original lead stories for you to review. We will be releasing the most popular supply chain stories and topics of 2013 soon, but let’s review where we started at the end of 2012 to help us learn where we need to go next.
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Four Common Inventory Issues – Which Do You Want To Fix?

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You experience inventory issues on a regular basis – Out of Stocks, Overstocks, Bumpy Cash Flow, and Lost Sales, happen in your retail business, some weeks have a multitude of these issues at the same time. What is the solution, is there a single answer or at least a solution that solves a large percent of the problems? What about Inventory Optimization?

  • Out of Stocks – Supply Chain Issues
  • Overstocks – Operation Problems
  • Bumpy Cash Flow – Planning & Finance
  • Lost Sales – Customer Service Issues
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LeadTime and Seasonality: Top 5 Replenishment Blogs of Summer

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Hottest Summer Topics of 2013: LeadTime and Seasonality

LeadTime, Lead Time Forecasting and Seasonality /Market Trends are the top interest blogs (stories) from Summer 2013. Based on the number of blog viewers and average time each viewer spent on each page, the following five blogs are 3-1 favorites from Summer 2013. These blogs indicate the key areas that companies want to improve going into the key fall sales season in 2013.

 

LeadTime and Lead Time Forecasting Do’s and Don’ts

LeadTime and Lead Time Forecasting (LT) are critical in the supply chain today. Tracking lead time variance and vendor fill rates may make a nice report; but reports don’t help you manage product service levels. We have customers who grew their gross margin over a million dollars from implementing our Lead Time Forecasting module; the ROI from effective Lead Time Forecasting is huge. While knowing when lead times change is important, most of you agree that how you use your lead time variance and fill rate (you are tracking lead time variance and fill rates right?) to improve your product/location service attained is the real goal in your supply chain
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