For many, automating the forecasting process is the first step to improve service levels and profitability. Recently I had the pleasure to sit down with Chris Reed, director of inventory and data management for wholesale distributor Ferguson Enterprises on how they are building an agile supply chain. You can watch the full webcast on-demand at: http://bit.ly/1P8E54w.
The webcast Q&A dove into several topics and generated a lot of great interaction. Unfortunately, we were not able to answer all of the questions. Chris Reed was kind enough to answer a few of the additional questions for us here on the Voyager Blog.
Q: How did you start your transformation?
A: Our transformation started with a review of how we forecasted before we implemented Logility. We found the process lacked clarity, measurements, and the right approach to complete. As a result, we often manipulated demand towards driving higher inventory. Logility was a good partner through the implementation, and we spent a great deal of time in the design phase to ensure we were utilizing the solutions to our benefit. My recommendation to those considering forecasting and planning software is to invest the time to get it right. We implemented over several months, beginning with a pilot and then implementing in phases across geographies.
Q: How is forecast accuracy calculated at Ferguson?
A: We measure accuracy as mean average percent error (MAPE) on a two-month lag basis. We measure down to the item-location level. We’ve seen forecast accuracy improvement since implementing Logility along with some new discoveries. For example, we are more aware of the impact of supplier product transitions and its negative effects on our forecast accuracy. If we are not preparing well ahead of the transition, market adoption will occur faster than the product master data and demand exchange in our systems, negatively affecting our accuracy. As we continue to learn more about our business, we are able to move “up the chain” and gain new insights into our demand drivers and how we achieve our customer service goals and become more nimble while constantly improving the forecast.
Q: What background do you consider critical to be a demand planner in your organization?
A: Our planners are based in our corporate office. I look for four things in all Supply Chain candidates, and demand planners are no exception: