Demand planners agree: the forecast is always wrong. “We haven’t been able to accurately forecast for a long time,” says Vosse. But rather than try to hone their predictions further, companies should be looking to improve their agility in responding to unexpected shifts in demand.
Vosse speaks of the process of “informed risk decisions.” At Teradyne, many components have a lead time stretching over two quarters, and require 26 weeks to procure. Yet customers expect delivery to occur within eight weeks or less. The solution, according to Vosse: “You need to start acting sooner in order to respond later.”
Teradyne is determined to give customers exactly what they want, despite the volatility that marks much demand today. In some cases, it has made changes to product while still in the process of building or configuring it. Even with the outsourcing of manufacturing, it has vowed to maintain high levels of service and customer satisfaction.
Teradyne can’t just build to a forecast supplied by marketing. “We need to own this,” says Vosse. “Make informed decisions, and start taking control of demand itself.”
The answer lies in a more strategic approach to inventory and supply. It’s important to create a “one-number” forecast that is shared by all parties, Vosse says, adding that Teradyne maintains close communications with its contract manufacturers.
Teradyne is deploying the RapidResponse planning and forecasting tool of Kinaxis to help achieve those goals. Contract manufacturers feed it data inside that application, allowing Teradyne to create an accurate material requirements plan and achieve a holistic view of the supply chain, “as if we had manufacturing within the company.”
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