JDE Forecasting Demystified

The Global Marketplace has been set for many years. Expectations are high and new opportunities are hard to come by. Since FedEx raised Customer expectation by delivering shipments the next day, modern manufacturers and distributors have been trying to play catch up with the supply expectation. The Management buzzwords of today are lean manufacturing, or Kaizen, or Demand Manufacturing, or Just in Time, or the Balanced Value Stream. What industry initiative that you have implemented in the last five years has actually paid dividends to the investors? Also, what does any of this mean to a Front line Vice President or Director that has to field calls from their largest customer about substandard performance? ERP Systems, the likes of JDEdwards, PeopleSoft, SAP, etc have promised ‘nirvana’ but rarely delivered the goods.

We tend to look at this as a complex problem when really there is an obvious solution; in fact the solution is so obvious that many have failed to see it. Let me share a personal experience that I had several years ago that changed my perspective on modern Executive Management. A few years ago while attending a Total Quality training class the group I was tasked with was given some simple problem to overcome. The exercise required the group to plan, organize, staff, direct and control the particular exercise and we were judged upon our result. I remember for the first time in my career I decided that we must spend a disproportionate amount of time on the planning of the event, so that when execution was required, we would already know the outcome. Our group was given an hour to accomplish the task, and I remember fighting to keep everyone focused on the plan for 40 minutes. Other members of the group were worried because our ‘competitors’ were already ahead of us.

I stuck to my intuition that day, and we only had 20 minutes for the final phases of the project, but they went like a precision clock work and we exceeded our nearest rival by about a margin of fifty percent. I had known this all along, but really had not allowed the process to be so transparent, that I started to think quite differently about planning and Enterprise Resource Planning Systems.

What drives an ERP System? The input! How accurate, how much time, how much evaluation is put into the input, can result in tremendous down stream benefits to any organization.

I want to quote a passage on Page 100 of BUSINESS @ THE SPEED OF THOUGHT by Bill Gates where he says,

"Machines generally reach customers within three to five days of order. Dell's business model is based upon the evils of inventory. The more Dell can reduce its inventory, the more it frees up working capital to drive into other revenue generating activities. Dell's reduced inventory translates to a savings of hundreds of millions of dollars in assets. At the same time, the requirement for greater customer service means that you never want to be out of stock either. Only information technology can provide the means to balance these needs. 'Physical assets used to be a defining advantage,' Michael says. 'Now they're a liability. The closer you get to perfect information about demand, the closer you can get to zero inventory. It’s a simple formula. More inventory means less information, more information means less inventory. We're trading physical assets for information.”

So what is so hard about doing this? Many of the large companies leveraged their buying power with their vendors to decrease the amount of physical inventory sitting in an investment state. In fact we can remember the fiasco created by Cisco Systems with their entire supply chain when in their arrogance they signed commitments to take inventory should their demand subside. We now deal in Global Economies and we can’t commit our organizations to the almost bankrupting policies that Cisco and Dell’s models provide. It is nice that Michael Dell only has four days of inventory, but what are his vendors sitting on and what will they do with inventory if they guess wrong?

Also, Bill and Michael are stating the industry standards as they were prior to the national Dock Strike on the West Coast of the US in the early 21st Century. The inability to receive product from Asia into the US almost cripples US manufacturers and distributors. So, what can we do and what are our options?

Bill Gates actually hit it on the head in his book; 'Michael says. 'Now they're a liability. The closer you get to perfect information about demand, the closer you can get to zero inventory. It’s a simple formula. More inventory means less information, more information means less inventory. We're trading physical assets for information.’ But how do we leverage this ‘information’ that Mr. Gates and Mr. Dell refer to? It is simple, build a model which allows a top level view of data and allows drill down to the transaction that is causing the problem. Present it to the right person in the right place at the right time and you have the ‘nirvana’ promised years ago by the ‘paperless’ computer systems.

Utilizing Q4Bis Analysis Tools and Standard JDEdwards Planning, you can move your organization closer to the model predicated by Bill Gates. More Information and Less Inventory. What do you have to loose, other than your business, why not give us a try and we will prove it to you?
Forecast to Sales Analysis
Have you ever wondered how your forecast is scoring compared to actual sales?
What would it mean to your business if you could receive instant feedback to supplied sales data?
What is the value of scoring your customers on their forecast accuracy when it comes time for their vendor analysis of your current supply chain organization?

The intricate mysteries of forecasting at the Customer/Sold To/Part Number level is revealed utilizing Q4Bis Forecast Analysis tool. Imagine being able to drill down on a missing forecast. What does it mean to customer fulfillment if you can find inaccuracies with customer supplied information before it becomes a fulfillment inaccuracy.

Managing large databases and high customer expectations is causing more and more pressure on organizations to fulfill and to satisfy demanding customers beyond any limits that were placed in the twentieth century. By utilizing a simple to use and highly accurate scorecard, you can have the visibility of on line analytical processing allowing your organization to drill down to the transaction level and provide immediate feedback to either you internal organization or to assist your customers in supplying a much more meaningful and accurate forecast.