The holy grail of supply chain optimization is predicting what will be sold, in what quantity, where, and when—with 100% accuracy. Organizations capable of doing that could run the leanest possible supply chain—with minimal inventory levels—while always satisfying customer demand and never stocking out. Unfortunately, such prediction accuracy is impossible to achieve, and for that reason, all organizations must carry some level of inventory to buffer against unexpected changes in demand. And despite the fact that organizations of all shapes and sizes have gorged themselves on demand planning software over the past few decades, demand forecasting still remains an unsolved problem within most organizations—“unsolved” in that the forecast error is still high, leading to stockouts, as well as excessive inventory levels and obsolescence.
The reason for this is that demand forecasting is a scientific problem of using algorithms and data to predict what will happen in the future with some level of accuracy (rather than a software problem of features and functionality). To improve this prediction accuracy, Complexica’s Supply Chain Optimisation & Planning Environment (SCOPE) relies upon a variety of statistical and non-statistical models within an ensemble model (rather than just standard statistical models like most demand forecasting applications), with each model attempting to generate the most accurate forecast possible and then learning from actual results. This process is further enhanced by using external data (which may vary from industry to industry) to increase the amount of variables each model considers. The result is a more accurate prediction, which leads to optimized inventory, working capital, and replenishment decisions.
SCOPE is a module of our Decision Cloud® software platform, which offers a number of tangible benefits for manufacturers, distributors, and retailers, including:
- Improved forecast accuracy, which is particularly important for hard-to-forecast product lines
- Reduced inventory levels
- Reduced stockouts, leading to a corresponding increase in customer fill rates (as measured by Delivery In Full, On Time metrics, “DIFOT”)
- Less time and effort for planning inventory and replenishment
To explore how our Supply Chain Optimisation & Planning Environment (SCOPE) can help you optimise your supply chain activities, please contact us