What Is Supply Chain Forecasting?

Supply chain planning refers to a system that organizes the execution and measurement of a company's comprehensive logistics activities. It includes the basic components such as forecasting, inventory planning, and distribution demand planning. It usually runs on integrated application systems based on many mainframe systems to achieve its functions.

Supply chain planning

US organizations are in the midst of a large-scale business restructuring process, with information executors paying particular attention to new methods and systems for handling or supporting reengineering processes. The many practices that are undergoing a reengineering process will no longer be based on mainframes but on smaller platforms. The reduction of computer applications from mainframes to client / server architectures or PC architectures has become the most popular reduction project. A CSC / Index survey of 224 US and Canadian companies found that business processes were again the company's primary goal, followed by improvements in corporate goal coordination and system development.

An SCP system consists of three parts: demand forecast, inventory plan, and replenishment plan. The function of each part is as follows:

Demand forecast

Collect historical data

Analyze historical data

Calculating predictions

Handling prediction results and corrections

2.Inventory planning

Establish inventory policy

Methods for building SCP systems. The most commonly used methods are: 1. Host / LAN dependent method. Select historical data from the host and store it in the user terminal, then separate the data from the production data file of the host, while ensuring non-destructive operation and minimal damage to the host system for continuous use. Without warning files from the host system, users can manipulate data, re-forecast and plan payments, establish promotional strategies, and apply overload management. After the decision is finally executed, the results are automatically uploaded to the host system.

2. Host / LAN independent method. Files are maintained in a LAN environment running the same functions, but independently of a host system.

An SCP system usually runs in a multi-machine environment. This demand usually originates from

Further developments in hardware, software, and network communications have made comprehensive multi-machine SCP processing systems increasingly attractive. The following three cases show that organizations are working on process reengineering in the area of logistics planning and control.

Pet Foods, as one of the largest food manufacturers and suppliers,

Even with strong technical support and comprehensive business process reengineering, implementing a new plan control system still requires some basic functions. There are five main steps to implement an SCP system:

1. PreparationReplace, organize, and inspire employees who will perform their tasks.

2. ValidationPropose and understand the planning process and prepare for the current business analysis.

3. VisionPropose a process vision that can produce creative results and prepare a future business plan.

4. Technology-define and refine the technical aspects of the process.

5. Change-execute a detailed plan and use continuous change mechanisms.

As a complete and valuable inventory planning tool, the SCP system provides features to help organizations make routine business decisions faster, clearer, and risk-free. Communication is the key to success. Collaboration between different departments is necessary for the successful execution of a complete business plan. The SCP system facilitates this collaboration.

In the end, there is no doubt that if an organization achieves and maintains a higher level of competition in the 1990s, a supply chain management system is very important. Individual users at the distribution point will be able to obtain accurate information more quickly, enabling them to control and manage the logistics process more efficiently. This is a strong evidence of the system's realization.

Internal integration must be in place

Internal integration is the most basic and strenuous challenge encountered by any company CEO. Its scope involves the unity of the company's leadership team and the coordination between various departments. For example, Norman Wasid, general manager of the Jaxson Supply Chain Services Company in Chicago, USA, especially praises the integrated marketing plan aimed at balancing supply and demand at any time and eliminating various differences, and has achieved great success in its supply chain operation and management. In fact, his planning is not very innovative, but it is just a regular meeting held by manufacturers, marketing experts, buyers, sellers, contractors, logistics providers, financial and financial leaders and other parties to jointly study and solve Various issues in supply chain planning. Of course, this type of meeting is mostly done through electronic information technology and remote "exchange" without any obstacles. And Stephen Buckley, IBM's supply chain analysis manager, pointed out that the company is thriving. In the final analysis, it is a highly developed corporate culture that fully utilizes electronic information networks and closely cooperates with each other in the supply chain operation and management. The supply chain process completed by humans has now become the interaction between devices. Computer-aided management and management process software is used to perform design, drawing, tracking, accounting, etc., to promote automatic communication between them and make judgments and Automatically execute the correct instructions. In short, the internal integration of the supply chain must be led by electronic information and digitization.

Mutual cooperation between partners must be strengthened

For the company, the largest partner in the supply chain is the customer. The implementation process of the productive integrated marketing plan often has very accurate "downstream data" from the majority of customers from the initial stage to the final stage. In fact, this data collection It is not difficult, for example, the barcode scan data on the cash register counter is one of the very important supply chain sales data information that is closely related to the customer, and the customer is one of the largest partners in the supply chain. Of course, it is not enough to understand all kinds of information from customers. The company must be very familiar with every link in the supply chain management process, including inventory change information including customer distribution centers. Only in this way can it accurately grasp the daily output of products. The well-known American motorcycle manufacturer, Harley-Davidson's headquarters receives at least 1,000 reports from marketers every day, from which it can systematically understand the sales of various brands of motorcycles, customer demand, motorcycles in the United States and even the world After-sales feedback, motorcycle market trends and sales volume estimates, etc. As a result, Harley-Davidson's production of high-end motorcycles increased by 25%, and production of large and medium-sized motorcycles increased by 10%. Of course, companies must also pay attention to information from suppliers upstream in the supply chain.

Operational process data must be accurate

The company CEO may know how to predict the supply and demand of products, but it is difficult to ensure that the supply chain process data is accurate and whether the company's production and sales process is arranged according to the correct supply chain planning. Specifically, whether the company's products sell well in the market is true, and whether the products are on the market in a timely manner, all depend on the accuracy of the supply chain process information. In order for the supply chain process data to be accurate, the company must manage its supply chain operations: (1) accurate estimates; (2) timely adjustments; (3) truthful budgets; (4) market-oriented; (5) manufacturing, operations, and Integrated management of logistics services. Sleapashan, director of the Chicago Supply Chain Consulting Center, pointed out that the company's business management data indicators are usually as many as hundreds, all of which are very important. Several of them are directly related to the company's operating efficiency and financial income. The key must be completed, otherwise it will affect the overall situation. If there is an error in the data of the supply chain process, the implementation effect of the supply chain planning will be severely damaged, and some documents from the data of the supply chain process will cause confusion in the operation and management of suppliers and manufacturers, resulting in product shortages.

Supply and demand software systems must be integrated

In the 1990s, when electronic information technology was in its infancy, before the network was fully implemented, the company's resource planning software system that provided users with financial services and other data services was operated in segments, and some passwords were needed in order to transfer Each piece of supply chain software in the system is unified. The new supply chain planning software system has been integrated. The American PeopleSoft software company integrates data software related to market transactions, business analysis and management decision-making into a single electronic software module, thereby greatly improving the response speed and reaching the level of zero-time decision-making. Fastenal, a company specializing in the production of industrial fasteners, uses the new software produced by PeopleSoft to completely replace the traditional one-household management model, which can effectively manage and manage a supply chain service network of more than 6000 different products at the same time , 12 distribution centers, and daily delivery services at 1300 retail stores in North America. Due to the implementation of a synchronized strategy between supply and demand, the market distribution of raw materials supply to products is completely consistent, coupled with closer cooperation with external partners, Fastenal has reduced costs and increased market competitiveness.

Planning must be unified and strive to be consistent

The makers of supply chain planning really need forecasting information such as marketing, sales, customer service, finance, and management. When all this information is combined, in order to avoid contradictions and exclusions in any case, and try to rule out their own affairs, we must do To unify. The unification of market prediction can maximize the market accuracy and feasibility of the supply chain, and make every business unit in all links well documented, so that the same goals can achieve maximum success. The supply department of PeopleSoft Software in the United States is not limited to information on data reports, but attaches great importance to field information from its distribution channels. On the one hand, it stores, analyzes, and evaluates information from downstream partners. The information from upstream partners was compared and optimized, and finally the supply chain planning was reformed to improve production efficiency by 20%.

Must be scientific and digital

Experience is indispensable. If there is a complete set of rigorous optimization equation software, human capacity will be greatly improved. Companies with many branches, huge management organizations, and a large number of products and raw materials import and export will need the market more. Scientific and digital planning. There are usually three types of optimization equation software that serve the supply chain market planning, namely manufacturing and processing resource planning software, production planning optimization software, and production line cost control software that are specifically designed to solve the "bottleneck" problem in production capacity. The scientific and digital supply chain planning can increase the economic order quantity of the company's operation and management, further eliminate manual operations, and create more intelligent supply-demand relationship networks, which also include the costs incurred in product manufacturing transformation and the costs incurred in product turnover. And other factors. At the same time, the scientific and digitalization of the supply chain allows company decision makers to optimize their production processes at any time in accordance with ever-changing market conditions, so as to avoid the company from being seriously affected by market fluctuations.

Must be people-oriented

No matter how well a well-designed supply chain is planned, it can be done without people. One of the simplest problems is that once a problem occurs in the supply chain channel, employees should know how to solve it. Therefore, in the supply chain planning, it is necessary to specify the division of responsibilities in each link and let each employee perform their duties. And managers of various links in the supply chain certainly do not like the supply chain planning which is full of loopholes. Therefore, each employee in the supply chain, whether it is within the company or other companies, can optimize its specific operation deployment according to its own judgment and the general principles of supply chain planning, but must be responsible for the final result of the operation. Therefore, people-oriented supply chain planning must be detailed. The instructions issued by the company's general manager in daily operations and management should be principled, leaving space for each department below to make daily specific production plans based on principles and supply chain planning, and to exert the wisdom and wisdom of each employee. In short, the planning in the supply chain must be strictly enforced, and planning and execution are two completely different procedures after all, so the planning procedure cannot be equated with the execution procedure, otherwise it is contrary to the people-oriented principle.

Matter management must be in place

The connection point between practical supply chain planning and execution is event management. As early as the late 1990s, IBM researcher Stephen Hacker launched the popular "sensor specification" electronic software that was all the rage at the time. The company's management department could quickly grasp and adapt to the market atmosphere through this software, and lock in advance Any problems that may occur in the supply chain, so zero time to fill the gap between supply and demand at any time, instead of relying solely on forecasting plans formulated 3 months, half a year or even 1 year ago. Subsequently, the software was further improved and developed in IBM and other companies. The accuracy of information transmission between the supplier and the buyer and the customer was improved. The information was analyzed and evaluated at any time based on the stored information data to understand the customer's real needs. Due to the continuous improvement of the performance of electronic software for event management, it is still possible to perform risk management in the event management process, continuously optimize the relationship between supply and demand, continue to expand the scope of use, and continuously improve the efficiency. Only the inventory cost of the supply chain is reduced by 4% each year.

The business concept of supply chain event management is that any kind of market prediction and planning is not 100% correct. For example, when the goods were shipped to the warehouse or the dock, the boxes were damaged, the production line suddenly stopped, and the number of products sold by the company was lower or higher than expected. Some problems were managed through the system, re-approved, and on the spot in accordance with commercial specifications. Solve, but most companies like to use supply chain event management as an early warning mechanism in their business management system.

We must adhere to the principle of no detail and no discrimination

The overall image of many companies is good, but the production efficiency is still not up. It turns out that the problems of these companies are caused by the company's leaders focused on big business, such as bulk goods, bulk customers, making a full-year or half-year plan, but ignored They consider it to be a trivial daily business, such as scattered customers and odd-lot services. If the makers of the supply chain plan give up the principle of non-detail and non-discrimination, they deliberately or unintentionally degrade in the process of formulating the supply chain plan, or even abandon their undervalued transaction items, and ignore the quality, quantity and price of each specific product As a result, the high price paid by companies is unwilling to see them. Due to the influence of politics, economy, geography, religion, and custom, the market today is often changeable. No one can tell which stream will become a torrent, or a cut-off occurs. Therefore, we must grasp the emergence of supply chain planning. Every phenomenon must not be overlooked easily. It must be pointed out that the quality of the supply determines the quality of the supply chain planning. Therefore, the optimization of the essential benefits in the supply chain planning is also an important software system that the planner must consider. The upper layer of the company optimizes the project software system according to the benefits. It can keep track of which customers bring the most significant economy and which supply chain channel has the lowest cost and highest security performance. This helps the company's managers and decision makers to adjust at any time according to market trends and development trends. Raw material supply channels maximize the use of space capabilities in the supply chain. For example, the US steel manufacturer Posco, because of the use of supply chain efficiency optimization software, significantly reduced inventory and product turnaround time, saving costs of $ 249 million in just six months.

Must be implemented in logistics

No matter how good the supply chain planning, market forecasting, and manufacturing processes are, they may be ruined by the incomplete warehouse system and the final service provided to customers. Therefore, good supply chain planning must carefully consider the selection of excellent and reliable carriers. According to the contract, the company must specifically discuss the daily work arrangements with the carrier in order to achieve the highest economic efficiency, the fastest speed and the lowest cost of product transportation. People usually think that running at full load can achieve this goal. In fact, the specific operation is not simple. The company must comprehensively consider the logistics process, accurately estimate how many carriers are needed in the supply chain, and always determine which carrier is the best for operation and management. . With the development of global integration of the international economy, the scope of logistics continues to expand and expand, and one of its ultimate goals is to create as much added value as possible while reducing costs as much as possible. Logistics is a scientific, systematic, information-based, and globalized business field, which cannot be tolerated by any traditional transportation business. The cost of creating logistics value is very expensive. Only when all links such as inventory, warehousing, packaging, transportation, handling, and sales are correctly positioned, greatly reducing costs and gaining a competitive advantage can logistics add value.