Posts Tagged ‘demand forecasting’

Optimizing the Order to cash process – What is your priority?

Saturday, October 5th, 2013
When companies take a hard look at their business model and the underlying process, what is the key objective that is motivating them?
1. Return on Investment2. Increasing Sales

3. Cost Reduction

Although all of the above are good objectives that lead to healthier businesses, companies are also driven by the latest buzz words – the latest consulting mantra, industry trend, and a flashy new technology from a sexy software company.

In the last year, there is no dearth of these trendy things.

IBP and S&OP, Lean, Demand-driven are all hot. SAP has made it very cool to say Hana!

Big Data, Predictive Analytics and In-memory computing have been dominating themes of many business conferences this Fall.

At times I wonder if smaller companies get driven by these trendy things and focus on the wrong things instead of fixing critical issues that are ailing their supply chain and their business model.

Do you have a good business process that will help you address the following questions:

1. Do you have a streamlined process from taking customer orders to fulfilment and delivery?

2. Do you know where your inventory is? How much of what? What is available to promise?

3. Do you have a decent demand visibility so you can plan ahead?

4. Does your middle management meet monthly or weekly to look at key operational metrics?

Optimizing the basic Order to Cash process will yield the cliched low-hanging fruits and result in a more compacted Cash-to-Cash cycle.

What is your cash-to-cash cycle? Are you a trend setter? Have you measured this lately?

Are you a rule breaker like Apple computer is – Apple has a negative cash-to-cash cycle of approximately 60 days.

Measure where you are and prioritize your building blocks:

1. Metrics and Score-carding

2. ERP and the Order to Cash Process

3. Sales Forecasting and CRM

4. Demand Forecasting and MRP

Then move on to the more esoteric initiatives in your maturity curve!

Consult our Knowledgebase at and my blog at

Best wishes as you start your Fall Season!


Coming to Oil & Gas Country – Demand Planning and Forecasting – Texas Feb 2013

Tuesday, October 16th, 2012
We will be hosting our first ever public workshop in Texas due to popular request from our Oil & Gas colleagues and planners at Oil Field Services companies.

Demand Planning Net will be bringing our popular two day tutorial workshop on Demand Planning and Sales Forecasting to Dallas, Texas in February 2013.  The two day workshop is scheduled for Feb 27-28 in Dallas, TX to be followed by our unique one-day seminar on Modeling and Metrics in SAP APO Demand Planning.

We just concluded our Sep 2012 workshop with a record turnout of brand name companies including Eaton, Michael Foods, Schlumberger, Thermofisher, Newell Rubbermaid, Lexmark, Abbott and others. Read our past attendees testimonials at –

For course content and registrations please visit

Why is this an important career enhancing workshop?
Attendees who complete the two day course and all exercises will be awarded a certificate of completion. This workshop will be the pre-cursor and required workshop to our certification program to be launched in 2012.

Get skills you can use at work
We will explain and demonstrate best practices in statistical model selection, illustrate how to improve model quality, and teach you how to leverage the forecast measurement process.

Learn from industry experience
We will bring practical examples from our consulting experience with clients in Consumer goods, Food and Beverage, Chemicals, Pharmaceuticals, Heavy Manufacturing, Aerospace, Medical Devices, Oil and Gas etc.

Network with peers
You will have the opportunity to meet, interact, and learn from other demand planning professionals with team challenges and networking exercises. Attending this workshop will introduce you to our vast network of supply chain professionals and career opportunities in North America.

Add to your credentials
Upon completion, you will be awarded a certificate of completion from Demand Planning LLC, attesting to your newly-acquired skills in Demand Planning and Forecasting.

Does the two day workshop contains topics related to forecasting of rarely used spare parts or not?
Yes we talk about models to forecast and stock for rarely used spare parts otherwise known as intermittent demand. While the focus is on forecasting and modeling, our approach is to marry up the business problem with the technology.

Look forward to seeing you in Dallas for our February 2013 workshop!! Early bird pricing is valid until December 1, 2012.

For course content and registrations please visit

Contact me if you have any questions- 781-995-0685 or

Happy Forecasting!

Demand Sensing, Demand Shaping and Demand Management – Are demand planners doing these activities today?

Wednesday, September 26th, 2012
Demand Planning Net focuses on the disciplines of Demand Forecasting, Demand Planning and Demand Management besides the related areas of S&OP and Inventory Optimization.
Occasionally there is a confusion when people talk about Demand Management. Some companies and consultants call classic Demand Planning as Demand Management. Even some consulting companies call the planning function as Demand Management.The demand side of the business should be engaged in Demand creation, Demand sensing and demand shaping and finally the Demand Management. So Selling and Marketing functions are in essence Demand creators and Demand Managers.

Demand Planners should play a facilitative and analytical role in the core selling function of Demand Management. They have the ability to predictive demand. They should also have the ability to understand causal effects of demand drivers.

So I see the Demand Planning function as an important partner in the Demand Management role.

Do the modern day demand planners help the company in

* Demand Sensing
* Demand Shaping
* Demand Management

I have seen Demand Planners reporting to the Supply chain function only do the last role namely as Demand Managers when there is supply shortage. They act as the bearers of the bad news to both Sales and Customers and work on rationing product.

On the other hand, Demand Planners reporting into Sales, Marketing or Finance generally play a more active role in some of the Sales Analytics function. They are also called upon to measure promotional effectiveness and pro-active promotional planning.

What is your experience?

Have you Demand-Shaped? Has your VP of Sales asked you a what-if question in the last 30 days?

By the way,

We have additional details on our consulting services in the Solutions Area.  Look at the detailed Solutions consulting page at  There are four broad areas of solutions consulting:

  • Usability Consulting for tools such as JDA Manugistics, i2, Oracle Demantra and SAP SCM APO Demand Planning
  • Re-design and Re-implementation services for SAP APO DP

Demand Planning = Unlocking Stat Models + Engaging your Sales Force!

Saturday, August 4th, 2012

Throw away that application software if that is not usable!

Your planners may have already boycotted the tool and resorted to Excel and off-line analytics for most of their planning work.  They are deep into using Excel and manual compilations of numbers, planners look at you almost incredulously when you start talking about “using Statistical Models”.

This demand planner from a big brewing company emailed me, “Mark, Stat Forecasting?  In SAP APO?  You are kidding right?!”.

How can we help the planners cut through the rut of laborious calculations and off-line exercises?  Can we re-establish the credibility in the power of Forecasting tools to build decent statistical models that will in fact help them produce better demand forecasts.

Demand Planning Net offers a service called Usability consulting where we improve the usability of your statistical tool by performing model tuning, setting the right tool parameters and finally training the planners in statistical modeling. Demand Planning Net has worked with clients helping them leverage the statistical features in their software applications.

• Most applications inherently have the analytical power to develop effective baseline forecasts.

• Most software tools allow you to create exception thresholds so you can streamline the forecasting process by exception.

Our consulting offering is an eight to ten week project that covers most usable features of the tool. We offer this usability consulting service for SAP APO, Oracle Demantra, Logility, JDA Manugistics and i2.

  • We start with a quick assessment of your configuration, planning process and system settings
  • Compile usability findings that may be useful if you are planning a re-configuration.
  • We then work on tuning models and develop the models for a sampling of SKUs/families
  • Develop Work-flow and custom training materials
  • Provide a Live training session where we will guide you through changing the models in your live environment.

If your system has performance issues besides poor planning interface, then you need to re-engineer the tool process for Modeling and demand planning. We offer re-design and re-configuration services where your configuration will be optimized, with perhaps even a new planning book and the right settings.

Particularly if you are a company in the SMB space recently started a new implementation or having difficulties with your current implementation, CALL US for a free initial consultation – a quick one hour tune-up as a pre-cursor to the real tune-up!

Reach us through or 781-995-0685.

Read our approach on how to improve APO usability with effective stat modeling - .

Read more on our consulting services at .

Talk to us!

Forecast Reconciliation and Proportional Forecasting – my e-book on

Monday, May 28th, 2012

Demand Planning just published our first e-Book Forecast Reconciliation and Proportional Forecasting! 

This is the first direct-to-Kindle book from Demand Planning, and we’re proud to bring this to our huge readership. We hope to follow this with other e-books covering various topics in Demand Planning and Supply Chain Management.

For a limited time (until Friday, June 29), this e-Book will be available at a special price of $0.99 at

Also note that we are entering the last few days before registrations close for our two day workshop on Demand Planning and Forecasting in June in Irvine, CA. This is your last opportunity to attend this certificate program before our Fall Calendar begins.

For the first ten registrants, we will send our exclusive white paper on True Demand and a link to download this e-book on Forecast Reconciliation free of charge at

We just finished the Boston workshop which experienced a great turn out from over 20+ companies and 35 participants.  Top Tier companies shared their experience with demand planning and learnt best practices to implement in their supply chains.

I learned some new perspectives on the practical challenges facing companies during this economic slow down.  There were companies with different challenges – forecasting demand for mainframe resources to a variety of service organizations with a perishable  product.

As you may have seen the testimonials, this is a practical hands-on workshop.  You need to bring your laptop to do all the exercises and group case studies.

Visit for more details.

Please feel free to email us your comments on the e-book on proportional forecasting.

Automatic Outlier detection – Blessing or Curse?

Friday, February 3rd, 2012

One of the puzzled questions that Demand Planners ask in our training workshops is why their software produces a flat forecast 90% of the time.  An expensive software that took an army and a couple of years to implement typically suggested a constant model or moving average model.  This resulted in a flat forecast.

Although the naked eye can graphically see (if graphs are made available to the user) a nice seasonal pattern, the expert selection in the software produced a constant forecast to eternity.  There are many tricks underlying this final result – some of them known and some of them hidden.

One of the culprits is the outlier detection process.  The software can intelligently detect outliers for a given setting and outlier detection method.  Typically you use a K-factor to develop tolerance bands around the ex-post factor to identify outliers.  What are K-factors and how to leverage the K-factor settings to produce good forecast models?

We observed in a variety of cases, people use low k-factors that then throw out all seasonal peaks and troughs.  A low k-factor is super vigilant.  It  does not allow any pattern to escape through to the modeling engine.  All the engine sees is just a cluster of a few data points that are closely scattered around the ex-post forecast or just a historical mean.

See the picture below.

A k-factor of 1 will eliminate all patterns seen in the demand profile.  It just keeps a fraction of the original data set that all point to the historical mean as a violently accurate forecast.  This has nothing to do with the power of the statistical engine available to the software.

In our up coming three day workshop we will discuss the perils of automatic outlier detection and have the attendees work through a hands-on exercise that will give better visibility to the entire outlier detection process.  We will explain the features under the hood of the SAP APO Demand planning module to navigate through this perilous process.

Day 3 will be all SAP APO with hands-on training on the software platform.  Attendees in September 2011 workshop were able to directly make model and parameter changes to their live forecasts in the workshop.

Visit for more details on the workshop.  Please reach out to me if you have more questions or want to discuss Outlier detection process in APO DP.

Demand Planning.Net announces the Training workshops for 2012

Monday, November 14th, 2011

Demand Planning.Net is pleased to announce the following dates for the Demand Planning and Forecasting workshops in 2012.  If you are preparing your training budgets, you may want to plan for these workshops for your new hires as well as experienced professionals that are new to forecasting or just as a refresher for those who know the theory but need a hands-on perspective and experience in forecasting.

Demand Planning and Forecasting 2-Day Hands-on Workshop at three locations:

Bengaluru, India Jan 27-28, 2012 at the Chancery Pavilion, Bengaluru India. Learn more…
Bahrain, Mar 12-13, 2012 at the Crowne Plaza Hotel for Middle East clients Learn more…
Boston, MA May 23-24, 2012 at the Four Points by Sheraton Boston/Norwood. Learn more…

This will be followed by the Fall 2-day seminar in September 2012.  There is a possibility of a one day workshop on S&OP during the Summer in Burlington, VT.

We also are offering the one day modeling and metrics workshop that focuses on SAP APO DP.

SAP APO add on 3rd Day Workshop available in Bahrain on March 14, 2012 and Boston on May 25, 2012. Learn more…

Please review for details on all of the above training workshops.


Demand Planning in the Middle East – Training Workshop

Friday, November 4th, 2011

For the first time, we are bringing our hugely popular two day workshop on Demand Planning and Forecasting to the Middle East at the request of many Saudi and Emirates based Forecasters.  We have received many requests for this popular two-day course in Demand Planning and forecast Modeling.  We will also provide you with a forecasting software for a limited trial to explore the power of statistics in Forecasting.

March 12th (Mon) and 13th (Tues), 2012 – 2 Day Interactive Workshop in Manama, Bahrain at The Crowne Plaza

View and print seminar brochure (PDF)

Register Now! – Regular Price $995
Early-Bird pricing $895 until January 20, 2012

In this specialized two-day course, we will explain the modeling methodology and process behind accurate demand forecasts.

We will also illustrate how to effectively use promotional information to arrive at an event based forecast. The focus will be on demand modeling using statistical techniques, the methodology to perform model diagnostics, forecast accuracy measurement and the process to incorporate market intelligence.

If you are a new demand planner looking to enhance your knowledge of business forecasting, you cannot afford to miss this opportunity!

View more information at 

I look forward to facilitating this workshop in March in Bahrain and to meeting many of the colleagues based in the Middle East and Europe.

There is also a one day workshop on Modeling and Metrics in SAP APO on Wednesday.   For SAP APO planners, it is ideal to take the three days as one combined workshop.

Please contact us if you have any questions.


Demand Metrics for Forecast Diagnostics

Wednesday, July 13th, 2011

We just published a new Demand Metrics Diagnostics Template for all DPNet users.

This template is provided as a reference to calculate the health of the modeled forecast for one Product/SKU over time.  There are a variety of metrics provided by both academics and software providers causing a lot of confusion about what each of these mean.  Hopefully, this template will settle the debate by clarifying each metric and illustrating the correct method to calculate these metrics.

This template can be used as a model diagnostic to evaluate the fitted model.  There are several metrics available to use as a model diagnostic including R-squared, Running Mean Absolute Deviation, Weighted Mean Absolute Percent Error, Co-efficient of Variation, Mean Absolute Scaled Error, Geometric Mean Absolute Relative Error and the Forecasting Efficiency Quotient.  You can also track forecast bias using the Forecast Bias measure, the Tracking Signal and the Mean Percent Error.

This template can also be used to calculate the observed forecast error for the same SKU if you have a history of Lag forecasts available for the same SKU.  This type of reporting is made available in our Vinayware software package which tracks multiple versions of the forecast.

The template is provided for just a few months.  If you want to calculate this over many months, insert rows and the formulas will self-adjust.

Based on our consulting experience we believe, Operation Management Professionals using these metrics will be able to judge the health of their forecast and understand their demand plans in a better way.

There are a couple of new metrics worth mentioning:

  1. Geometric Mean Absolute Relative Error – Calculate how improved your forecast is compared to a naive forecast.  This is a complex and esoteric measure – it compares the improvement in forecast accuracy compared to a naive model that uses either an average or a moving average or a policy of using the last month actual as the forecast.
  2. Forecasting Efficiency Quotient – We are introducing this new metric as an alternative to the GMRAE and something of an easier measure to understand by the businesses.

More on the FEQ in a separate blog entry.  Stay Tuned!

Now you can download this new metrics template at or at this other link

Demand Planning and Forecasting workshop, September 2011

Wednesday, June 29th, 2011

September 21-22 at Four Points by Sheraton

Our recently concluded May 2011 two day Demand Planning and forecasting workshop was an immense success. I personally enjoyed the interaction with the attendees from a variety of industries.  At the conclusion of the workshop, people left happy that they learned the core of demand planning and the methodology required for forecasting.  You can see all the testimonials from the May workshop online at our website.

In this type of specialized two-day course, we explain the modeling methodology and process behind accurate demand forecasts and how to effectively use promotional information to arrive at a consensus forecast. We focus on demand modeling using statistical techniques, the method to perform model diagnostics, forecast accuracy measurement and the process to incorporate market intelligence.

To incorporate the feedback from May 2011 workshop, one of the topic that we will be spending more time in our upcoming September 2011 workshop will be ‘How to forecast with decomposition models using Microsoft Excel’.  We will show you how to calculate level, trend and seasonality and how to develop a forecast using excel.

Registrations for September 2011 workshop are filling up fast and we have early bird price of $895 which will expire on July 31, 2011 on a first come first serve basis. Only 5 more seats at this price are available. We always have 10% group discount for group of three or more using one payment method for all the registrants. To learn more about the workshop and the agenda please visit:

We hope to see you there!