Schedule/ Forecast Shortfall Solutions

Analyse and Manage Schedule Error and Fluctuation

Customer schedules state their requirements for the forthcoming weeks. With each new schedule, the requirement for a given week (week X) is revised. Outside the lead time, this fluctuation is not a problem. However, once the required date falls inside the lead time, this fluctuation causes disruption within the supply chain.

The schedule revisions continue until the delivery date and when the actual requirement is compared to the schedule, it can be quite different: this is the schedule fluctuation and error and is represented on the graph below:

Customers that supply schedules invariably are very important to your business, accounting for a considerable proportion of demand. Even though their schedule may fluctuate and contain an error, their requirements must be met 100%. This is usually achieved through expediting which is costly.

The disruption within the supply chain caused by the fluctuations also affects the delivery performance of your manufacturing unit or suppliers. As these order amendments occur within the lead time, the transparency of delivery performance is lost which makes the process more difficult. However, customer schedules forecast overall demand well, catching seasonal peaks and troughs, and therefore should be retained and not discarded. The key is managing the schedule error and smoothing the fluctuations.

Inventory Strategy Manager analyses the schedule error and enables the user to decide the proportion of the error to be satisfied from safety stocks and the remainder to be expedited: to satisfy 100% of the schedule error may be require very large safety stocks that would be largely redundant most of the time. The safety stocks will also allow the schedule fluctuations to be smoothed. Exceptional demand is managed by additional orders, but most fluctuations will be covered by the safety stock. The disruption within the supply chain is largely removed and consistent delivery performance can be more easily attained and measured.

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