In my last article, I explained why I think New Year’s resolutions are important in the supply chain planning sphere—even for people who don’t make New Year’s resolutions in their daily lives. To put it simply, the New Year is always a good time to see things through a new lens. Something about the turning of the calendar makes us all more receptive to change—and change is good.
I discussed the importance of putting useful supply chain performance measures in place for 2015. Today, let’s talk about cleaning out your garage.
I don’t mean that literally, of course. But I think cleaning the garage is a good metaphor for purging the forecast database.
New Year’s Resolution #2: “I resolve to purge old records from my forecast database.”
It’s amazing how many people have a garage that’s so packed with boxes of keepsakes, seldom-used fitness equipment, landscaping supplies, and just-plain-junk that they can’t even park their cars in there.
I’m not judging—just stating a fact.
Heck, my own garage probably has three or four bags of lawn fertilizer that each have maybe two scoops of product left in them. I know I should consolidate and discard….but it’s a pain.
It’s equally amazing how many companies have forecasting databases that are full of old records that clutter up every forecast report. I was talking to a customer the other day who was running a database in which about 20% of the records represented “dead” items.
So, how do you identify when a product has become “dead” and should be purged from the forecasting database? I say if you haven’t sold that product at all in the last 12 to 24 months, you can purge it. Or, if you have no inventory of the product and you’re not actively forecasting it, that’s an equally good reason to delete the record.
Why bother putting in the time to identify and delete records like these? Because your batch processes will run faster. Your record search will be more efficient. You’ll have fewer forecast records to review, and your reports will be cleaner. Your ABC analysis will be more accurate, and you’ll have fewer items to worry about in your replenishment review.
Don’t Forget to Filter Your Sales History
Purging your forecast database will go a long way towards making your reporting better and your life easier in 2015. But what can you do about those non-recurring events that can skew your forecast accuracy?
I’m talking about promotions, large pipeline-fill orders by big-box retailers, and end-of-quarter price reductions. While these events may bring much-welcomed surges in revenue, they can also give you an unrealistic view of future demand if you include them in your forecasts.
So, after you’ve purged dead records from your forecasting database, be sure to filter your sales history to eliminate the non-recurring events. You’ll end up with a much more accurate picture of future sales.
The best way to approach this task is to use a system that automates it. Some systems can automatically filter demand history values that are outside of a statistical confidence interval. Others will identify the exceptional demand and rely on you to determine how to adjust the sales history to eliminate the unwanted data.
Demand Solutions DSX actually does both! Our system makes it easy to include data scrubbing as part of your regular demand planning process.
We've created a presentation with ten supply chain New Year's resolutions. Please download the presentation here.