Quick Response Logistics

3. When there is an out-of-stock or an overstock, check the forecast accuracy. This would make sense if the following problems were extremely unlikely: suppliers who shipped late or who short shipped, inventory record errors, open order errors, inability to accurately know what is intransit, failure to communicate discontinued items or new products, inability to manage use up of the discontinued inventory before the new inventory is shipped to customers.

Here are the forecasting requirements for quick a response competitor. They are conveniently shaped around the very popular Focus Forecasting strengths. Most people would agree they are an excellent place to begin.

The forecast must be:

1. As accurate as possible

2. Easy to understand

3. Require very little maintenance

4. Quickly generated

If the forecast is not accurate people will not use it. People have got to believe they have the very best forecast possible. One very effective way to convince people the forecast system does provide accurate forecasts is to compare forecasts of different systems or different strategies for past periods and determine what is the best forecasting strategy or system. The forecast system you choose should be the most accurate strategy or system available. Notice there is no need to set a specific accuracy percentage. Playing can you outguess Focus Forecasting is one way to convince people Focus Forecasting is more accurate than a person's judgement. Comparing how Focus Forecasting and other forecasting systems would have forecast sales is another way to convince people that Focus Forecasting provides a more accurate forecast.

People need to understand how the forecast was developed in order to believe in it. Focus Forecasting quickly compares the forecast accuracy of fifteen formulas using past sales history for each item in order to select the best formula for each item. Focus Forecasting uses the formula it found most accurate in the past to forecast the future. The formulas are simple. Formulas used by Focus include: sales will be an average of the past twelve months, sales will be the same as last year, sales will be the same as last year plus ten percent, etc. All of the formulas are very easy to understand.

Focus Forecasting requires almost no maintenance. Detail forecasts are reviewed on an exception basis and usually to help develop estimated sales during promotion periods or to add some other marketing intelligence amendment to the forecast. These amendments to the forecast are called special requirement quantities and are added to the forecast to become gross requirements for Distribution Resource Planning. Because there is no need to review forecasts, the person responsible for managing the forecasting process can spend time gathering outside information such

as promotions, price changes, new markets, new customers, new product introductions, product phase outs, the effects of competitor actions,etc.

Competing with quick response performance means there is not a lot of time to analyze the data. Inventory management decisions are being made daily and whether or not the forecast has been finalized makes no difference. Focus Forecasting will forecast thirty-two thousand items in under 4 minutes.