• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • Login
  • Subscribe
  • Logout
  • My Profile

  • CORONAVIRUS
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • REGIONS
    • Asia Pacific
    • Canada
    • China
    • Europe
    • Latin America
    • Middle East/Africa
    • North America
  • THINK TANK
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » Combating Volatility and Forecast Errors

Combating Volatility and Forecast Errors

December 27, 2012
SupplyChainBrain

Terra Technnology's 2012 benchmarking study on forecasting showed a 1-percent increase in the forecast error rate among the large CPG companies surveyed, which followed a 2 percent increase in 2011. "We clearly are not headed in a good direction," says Byrne.

The annual Terra Technology survey measures trends among users of Terra's forecasting software, which include 13 of the world's largest CPG companies. Byrne notes that these companies represent, on an annual basis, about $100bn in sales, roughly four billion cases, 90,000 stocked items and almost 500 locations. "It gives a pretty comprehensive look at what is happening in consumer packaged goods," Byrne says.

Other highlights of the 2012 survey cited by Byrne are: generally flat overall sales, a considerable increase in promotions, and an increase in net sales. "It looks like these companies are having to run a little just to stay in place," says Byrne. "I think they also are trying to recapture some of the share lost to private label and store brands during the recession."

One of the key things companies can do to turn this around and decrease forecast error is to make better use of data from retailers to refine their forecasts, Byrne says. He compares the situation to a trip to the store for milk. "When I need milk, I don't think about how much milk I bought this time last year - I look in the refrigerator," he says. "Looking in the fridge is far more effective." Similarly, analyzing point-of-sale retail data is the most effective way to reduce forecast error, he says, noting that Terra's customers who take this approach experience, on average, a 30-percent to 50-percent improvement.

Retail data has been available for a while now, but the volumes are daunting. "If you just think about Walmart, it has 3,000-plus stores and thousands of active items, so you are looking at millions of transactions a day," Byrne says. "It is up to the manufacturer to take that data and use it to improve the supply chain."

Byrne says that Terra's demand-sensing technology provides a structured, robust way to do that by applying the right mathematics. "It is really a problem of scale," he says. "You need the computing power."

Looking to the future, Byrne sees continuing pressures on costs and cash flow for CPG manufacturers. One positive aspect is that this drives innovation, he says, noting that the 2012 survey showed a significant increase in new products. "I think we will see more innovation, which will drive more volatility and more supply chain challenges."

Byrne also predicts "a re-imagining of VMI over the next year or so based on more granular, more accurate data." To support this "there will be a big push for better, more automated out-of-the-box solutions from vendors," he says, adding that manufacturers should hold software companies "a little more responsible for improving the quality of their output."

To view video in its entirety, click here


Keywords: supply chain, it supply chain, supply chain management, supply chain management it, supply chain management scm, inventory management, inventory management it, inventory control, supply chain planning, supply chain systems, retail supply chain

RELATED CONTENT

RELATED VIDEOS

Technology Global Trade Management Sales & Operations Planning SC Planning & Optimization Supply Chain Visibility Business Strategy Alignment Global Supply Chain Management Quality & Metrics Consumer Packaged Goods Retail
KEYWORDS Business Strategy Alignment consumer packaged goods Global Supply Chain Management Global Trade Management inventory control Inventory Management inventory management IT IT supply chain Quality & Metrics Retail retail supply chain Sales & Operations Planning SC Planning & Optimization supply chain Supply Chain Management supply chain management IT supply chain management SCM Supply Chain Planning supply chain systems Supply Chain Visibility Technology
  • Related Articles

    Combating Volatility and Forecast Error

    Combating Economic Volatility and Demand Variability

SupplyChainBrain

100 Great Supply Chain Partners Issue 2009

More from this author

Wake up to Coronavirus Updates and the latest Supply Chain News!

Subscribe to our Daily Newsletter

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • Coronavirus-watch-Armada

    Virus Update: Pfizer Plant Cited for Quality Issues; Vaccine Maker Warns of Raw Materials Shortage

    Coronavirus
  • Walmart

    Walmart Embraces a Local Fulfillment Model for Grocery

    Logistics
  • Shipping Logjam

    U.S. Retailers See Millions in Sales Delays Amid Shipping Logjam

    Coronavirus
  • How Can E-Commerce Retailers Compete?

    Smaller E-Tailers Weigh Pros and Cons of Fulfillment by Amazon

    Logistics
  • Amazon

    Podcast | Making It As an Amazon Seller: It’s No Picnic

    Logistics

Digital Edition

Scb feb 2021 lg

2021 Supply Chain Management Resource Guide

VIEW THE LATEST ISSUE

Case Studies

  • Remote Implementation: A Dose of the Right Medicine for B2B Pharmacy

  • LSP Saves Customer $1.5 Million a Year With MPO Global Inbound Management

  • Auto Supplier Wows Key Client Using riskmethods Supply Chain Savvy

  • Integrating Shipping and Compliance Saves Conglomerate Millions

  • How a Consumer Goods Giant Upped Its On-Time Delivery Performance

Visit Our Sponsors

6 River Systems ArcBest Armada
aThingz BluJay Burris Logistics
DSC Logistics DCSA (Digital Container Shipping Association) DHL Resilience360
Genpact Geodis GEP
GreyOrange Honeywell Intelligrated Infor
Inmar Kibo Commerce Logility
Magnitude Software MPO Old Dominion
Oliver Wight OpenSky Paccurate
Ports America Purolator QAD Precision
Red Classic Riskmethods Snapfulfil
TGW Systems Tradepoint Atlantic Transportation Insights
Watson Land Company Westfalia Technologies Workjam
Yang Ming    
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2021 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing