Getting Started

• Define How To Forecast

First, there are the primary item level forecasts, which support some kind of inventory replenishment process. Then, there are the summary forecasts needed by management to make new plans for the future or to compare to existing ones.

The primary forecasts are based on demand for an item or an item at a location. These forecasts will be used by our Inventory Planning to compute inventory targets and reorder rules. They are often passed to some other system like an ERP or home grown planning system for the same purpose. It is possible to use the system for planning only without primary forecasts for inventory management.

The secondary or other forecasts are those needed by management for planning. We help you develop custom group structures called pyramids or environments to give management information so they can review in their own terms and respond. Examples of the secondary or summary levels are product line, sales region or division so that management can see summarized data, often in financial terms like sales dollars. Very often the forecasts are oriented to a product by customer so the Marketing and Sales management can better work with them. These summarized forecasts can be modified and the results forced or allocated to the primary forecasts. An example of a typical company structure is shown below.

The structure above is an example that has evolved after several years of use. We help our customers plan the initial group structure to get started and then to evolve as other needs and uses emerge. The pyramid on the left has forecasts for regional sales at the bottom and they summarize into total product forecasts and total division, product line and so on. The total product forecast is the primary forecast used to plan manufacturing. The pyramid on the right results in a second summarization with region near the top so that forecasts can be reviewed by regional managers. The system is flexible and can easily be modified by you when things change.

• Define Data to be Loaded

Define the data you need to load into the forecasting system and decide how you will load it. There are two main parts to the data. Three years of demand history is used to provide the basis for statistical forecasting. You can use customer orders, shipments or invoiced sales (or anything else) as the best estimate of demand history. The other data needed is anything that will be used in the grouping and summing process such as product line codes, unit prices and the like. Every month, new demand and updates to existing codes are loaded.

We support four ways of loading the data. You can supply a fixed format text file that contains everything needed. This usually requires a program to select and summarize the demand from your files or database. You can generate a standard CSV (comma separated values) file, an Excel spreadsheet or an XML (eXtended Markup Language) file from your database. The later three have the advantage of defining the order of the data presented in our system and limits workload for your IT staff.

• Define Data Profile by using the Application

Sign on to the application system and create the profile for the environment or pyramid that you have defined. This involves entering descriptions for the data elements you will be loading. The result is a system that is configured to your company with appropriate data names in all places to ensure that the terminology used doesn't have to be changed or re-learned. Your data can be loaded to the system and you can begin forecasting.