Comments on "Effective Forecasting and Judgemental adjustments: An Empirical Evaluation and Strategies for Improvement in supply-chain planning

Cataloged from PDF version of article.Demand forecasting is a crucial aspect of the planning process in supply-chain companies. The most common approach to forecasting demand in these companies involves the use of a computerized forecasting system to produce initial forecasts and the subsequent judgmental adjustment of these forecasts by the company's demand planners, ostensibly to take into account exceptional circumstances expected over the planning horizon. Making these adjustments can involve considerable management effort and time, but do they improve accuracy, and are some types of adjustment more effective than others? To investigate this, we collected data on more than 60,000 forecasts and outcomes from four supply-chain companies. In three of the companies, on average, judgmental adjustments increased accuracy. However, a detailed analysis revealed that, while the relatively larger adjustments tended to lead to greater average improvements in accuracy, the smaller adjustments often damaged accuracy. In addition, positive adjustments, which involved adjusting the forecast upwards, were much less likely to improve accuracy than negative adjustments. They were also made in the wrong direction more frequently, suggesting a general bias towards optimism. Models were then developed to eradicate such biases. Based on both this statistical analysis and organisational observation, the paper goes on to analyse strategies designed to enhance the effectiveness of judgmental adjustments directly

Implementation of Information Systems Infrastructure for Supply Chain Visibility

Despite the considerable recognition of the importance of and the need for supply chain visibility, organizations experience difficulties in actually achieving such visibility. This may be attributed to two major reasons. First, organizations adopt different types of information technologies such as electronic data interchange or business-to-business for supply chain activities, which cannot communicate with each other without the adoption of many common “standards” for data representation and transmission. Second, organizations may have initially adopted supply chain information systems for different reasons such as mandates and may have engaged in selective “automation” of communication with its partners. Consequently, information systems within supply chain networks are “isolated” and organizations lose supply chain visibility. This study examines the implementation of supply chain management information systems at real-world organizations for achieving supply chain visibility. The findings of this study w l be useful to organizations as they strive to implement solutions for supply chain visibility

Logistics Outsourcing and 3PL Challenges

Logistics has been an important part of every economy and every business entity. The worldwide trend in globalization has led to many companies outsourcing their logistics function to Third-Party Logistics (3PL) companies, so as to focus on their core competencies. This paper attempts to broadly identify and categorize the challenges faced by 3PL companies and discover potential gaps for future research. Some of the challenges will be related with the experience and information collected from interviews with two 3PL companies.Singapore-MIT Alliance (SMA

Timely-Throughput Optimal Scheduling with Prediction

Motivated by the increasing importance of providing delay-guaranteed services in general computing and communication systems, and the recent wide adoption of learning and prediction in network control, in this work, we consider a general stochastic single-server multi-user system and investigate the fundamental benefit of predictive scheduling in improving timely-throughput, being the rate of packets that are delivered to destinations before their deadlines. By adopting an error rate-based prediction model, we first derive a Markov decision process (MDP) solution to optimize the timely-throughput objective subject to an average resource consumption constraint. Based on a packet-level decomposition of the MDP, we explicitly characterize the optimal scheduling policy and rigorously quantify the timely-throughput improvement due to predictive-service, which scales as $\Theta(p\left[C_{1}\frac{(a-a_{\max}q)}{p-q}\rho^{\tau}+C_{2}(1-\frac{1}{p})\right](1-\rho^{D}))$, where $a, a_{\max}, \rho\in(0, 1), C_1>0, C_2\ge0$ are constants, $p$ is the true-positive rate in prediction, $q$ is the false-negative rate, $\tau$ is the packet deadline and $D$ is the prediction window size. We also conduct extensive simulations to validate our theoretical findings. Our results provide novel insights into how prediction and system parameters impact performance and provide useful guidelines for designing predictive low-latency control algorithms.Comment: 14 pages, 7 figure

Shareholder Wealth Effects of Information Technology Enabled Supply Chain Mnagement Initiatives

In recent years, there has been an increasing interest in using information technology to improve supply chain management (SCM) performance. This study examines the shareholder wealth effects of SCM software initiatives, and thereby contributes to the literature on IT investments and SCM. Specifically, we examined the abnormal stock returns to SCM software initiatives announced by firms between 2000 and 2003. Based on a sample of 346 public announcements, we find that the market returns for SCM software investment announcements were positive and significant. In addition, multiple regression analysis is used to evaluate the impact of several firm specific and investment specific variables on the direction and magnitude of the change in the stock market reactions. We find higher functional scope and higher physical scopes of the SCM projects to be associated with greater abnormal market returns. Our analysis did not indicate firm size or industry affiliation to be significant differentiators of stock market reactions

The value of sharing planning information in supply chains

Purpose - The development of information technology has made it possible for companies to get access to information about their customers’ future demand. This paper outlines various approaches to utilize this kind of visibility when managing inventories of end products on an operative level. The purpose is to explain the consequences, for capital tied up in inventory, of sharing four different types of planning information (point-of-sales data, customer forecasts, stock-on-hand data, planned orders) when using re-order point (R,Q) inventory control methods in a distribution network. Design/methodology/approach - A simulation study based on randomly generated demand data with a compound Poisson type of distribution is conducted. Findings - The results show that the value of information sharing in operative inventory control varies widely depending on the type of information shared, and depending on whether the demand is stationary or not. Significantly higher value is achieved if the most appropriate types of information sharing are used, while other types of information sharing rather contribute to decreased value. Sharing stock-on-hand information is valuable with stationary demand. Customer forecast and planned order information are valuable with non-stationary demand. The value of information sharing increases when having fewer customers, and when the order quantities are large. Sharing point-of-sales data is not valuable, regardless of the demand type. Research limitations/implications - The use of simulation methodology is a limitation, because the study has to be limited to a specific model design, and because it is not based on primary empirical data. The study is especially limited to dyadic relationships in supply chains, and to distribution networks with a rather limited number of customers. Practical implications - Guidance is given about what type of information should be appropriate to share when different types of demand patterns and distribution networks, and how order batch sizes and lead times affect the value of information sharing when using re-order point (R,Q) methods. Originality/value - Very limited research providing specific assessments of potential inventory control consequences when sharing planning information in various contexts has been found in the literature. The findings and conclusions should also be valuable for the supply chain integration and collaborative planning literature

Hacia la mejora del manejo de inventarios caso de estudio en una organización sin fines de lucro : proyecto de investigación

Nowadays, companies around the world, even non-profit ones should keep control of their operations and make improvement efforts in order to remain competitive in a highly demanding market. One of the relevant operations within an organization is the supply chain management, where a significant portion of total costs is associated, specifically the ones relating to inventory management. This paper presents a case of study focused on the inventory management of a nonprofit organization, particularly in one of the bookstores that belong to this organization located throughout Latin America. The actual system and policies for inventory management are analyzed along with the purchasing decisions. A root cause analysis of the principal problems in inventory management is presented, followed by an improvement plan. This plan is compounded by two stages: first, a centralized system for the control of inventories is implemented using available technology combined with Statistic Control Charts; second, a technical forecasting method is employed to help in the decision making process of purchasing. And an inventory management policy is proposed, with a particular focus on the key items sold by the bookstore. Results were validated through interviews with the actors of the process