demand forecasting

IPhone 5 Apple Maps VS. Google Maps

Posted on by f1213nshah

In 2007 Apple introduced something called an IPhone which changed the world forever. Each year since 2007 Apple has been releasing new models of the IPhone. This year there newest addition was the IPhone 5. The IPhone 5 is the fastest and thinnest smart phone in the world.  Apple sold over five million units within the first couple weeks.  This is more than the amount of IPhone 4S that were sold in the opening weeks.

The new IOS6 firmware that was introduced with the IPhone 5 came with a few changes. A lot of people weren’t happy with some of these changes. One of the biggest shockers for users was that the maps application was changed. The previous five IPhones used Google Maps. Google Maps has been the leading maps application for smart phones for a while now, ever since they passed Yahoo and MapQuest.

Apple introduced its own Apple Maps application with the release of IOS6. There have been many complains about this new maps application. People have been complaining that:

  • The application has fewer details
  • There is no longer an option to select public transportation
  • There are misplaced landmarks

These issues aren’t really that big of a deal. Apple was looking at the overall picture when they decided to make the switch from Google Maps to their own. It took Google years to make it to the top of the market with their maps application. People shouldn’t be surprised that apples maps application is not as good as Google’s. The reason is because Apples application is still new. I’m sure that if consumers give Apple some time they won’t be disappointed. For years now Apple has been coming out with mind blowing innovations and I feel that there maps application isn’t any different.

People have been too busy complaining about the small issues that they don’t even realize that apple added the one thing that most users were asking for, turn- by- turn navigation.  Apple couldn’t keep Google Maps because Google only allowed turn- by- turn navigation on android devices.

I feel that Apples quality and effort can’t be beat.  They have been making top quality products for years and I feel that this is never going to change.

http://news.yahoo.com/analyst-iphone-5-demand-unfazed-map-concerns-212545406–finance.html

 

Restaurant Management

Posted on by f1222lhuang

My uncle runs a nice restaurant in Chicago. The restaurant has been expanded for twice in two years. Now the restaurant can contain more than more than 300 hundred people and still people are waiting in front of the restaurant waiting for the tables. I can not help wondering how a restaurant grows up so fast in such a competitive industry. After a long chat with my uncle, I find out managemt play the most important role in a restaurant.

I used to think that restraurants are just opening their doors waiting for customers. But in fact, if you want to make a restaurant popular, you have to be very serious about quality management. The reason people go out to eat are food and dining enviornment. The refer to the quality of food and quality of services and decoration. Since restaurants build their reputation on words of mouths, they have to keep customers’ satisfaction on both espects. To ensure the quality of food, a restaurant keep their eyes on the cooking materials, the skills of chefs, and the cleaness of the kitchen.In addition, the taste of dishes have to adjust based on customers’ needs. On the other hand, the quality of decoration and services can distiguish a restaurant from other competitors. With this idea in my uncle’s mind, he decided to employ designer to decorate his restaurant in traditional Chinese style. What’s more, he hired people to give his waiters and waitresses professional trainning because he thinks that every experience for customers is crucial and his employees should try their best to make the experience wonderful.

Another very important technique used in restaurant management is forcasting. Atucally, restaurant business is a very time sensitive industry. For example, in a day, 11 a.m to 2:p.m., 6p.m.-9 p.m. is a big rush time. In a weekend, Friday and Saturday would be very busy while Tuesday and Wednesday would be a little quite for restaurants. In a year, June to September would be the big time for people eating outside. Since food material is very time sensitive inventory, restaurant has to adjust supply orders according to forcast of demand and schedule for HR. Good forcasting can dramtically lower the cost of a restaurant and enhance its profitability.

I am sure there are more management skills that can be used in restaurant management, is there coming up to your mind?

Wal-Mart and the Successful Supply Chain Management

Posted on by levik301s12

We all know that Wal-Mart is one the most sucessful companies out there with one of the best supply chain’s ever created. The University of San Francisco wrote up an article on the techniques that Wal-Mart uses to become sucessful and they are exactly the same techniques that we learned in class.

http://www.usanfranonline.com/wal-mart-successful-supply-chain-management/

Wal-Marts cost saving methods are always passed down to the customer as the costs associated with their supply chain is minimized.

Their success comes from:

  • Cross Docking
  • Demand Planning
  • Forecasting
  • Inventory Management
  • Strategic Sourcing
  • Distribution Management
I looked up cross docking to get a better understanding of what it is and how Wal-Mart uses it and it is a technique that replenishes inventory. Cross-docking is when inventory comes from the supplier directly to the retailers warehouse and then turned around and shipped out on trucks to the retailers store. This minimizes shelf time and inventory costs that Wal-Mart would of had to pay.
In addition, supply chain managers at Wal-Mart focus heavily on demand planning and forecasting like we did in class in order to acheive “lean inventory”. They focus on historical data, upcoming sales, and trends in the indsustry to predict the inventory levels they need.  They then forecast out their predicitons to make sure distributors have just the right amount of inventory on hand to reduce inventory costs.
One of the best ways Wal-Mart gets the lowest prices though is it vendor partners and the long-term contracts established with them. Since Wal-Mart is a market leader in retail sales, vendors are forced to agree to low margin, high volume sales to Wal-Mart if they want to stay on the retailers shelves.
One of my first accounting jobs was working at a online computers parts retailer/wholesaler. We had a few warehouses connected to an office and this gave me my first insight into supply chain and inventory management as I was involved in purchasing as well. Initially, our inventory system was out of date as we used a periodic system that was time-consuming and expensive. Our inventory mangement became more efficient when we ordered a SKU system to keep a perpetual count of what we had. Our hot-selling or our “A” list items were constantly being re-ordered and our inventory became much more lean to the point where we were restocking huge shelves every week. We used histroical data such as Black Friday sales and upcoming promotions to know how much to stock and also became a volume buyer to achieve the lowest prices.
Have you had experience being in a purchasing department and measure the inventory volume that needs to be purchased?

 

Even P&G faces unexpected risks

Posted on by daniely599

When working on a project to launch a new product a risk plan is put together as we’ve discussed. It’s known that Mother Nature, the economy and government regulations could be hard to forecast and thus could change your plans dramatically.

You do your best to put appropriate plans together to plan for these scenarios, but what do you do when the unthought of happens?

In April of 2011, P&G announced it was going to introduce an entirely new way to wash clothing — Tide Pods. A concentrated individually packaged detergent which removes stains and cleans better than traditional detergents according to their testing. They were planning to spend $150 million on marketing and launch in September of last year, hoping for first mover advantage. Then they announced a six month delay to launch the product earlier this year. Meanwhile Purex, All and Arm & Hammer have had time to perfect their products and launch at the same time. When P&G finally released the product to retailers, they faced supply issues and could only supply enough products for shelf displays, and not off shelf promotional spaces which increase awareness for new products.

Retailers are upset, and P&G is blaming the complicated new production process. Investors are already frustrated believing that P&G is lacking the innovation they once had (they’re moving their personal care HQ from Cincinnati to Singapore in an attempt to jump start that business).

Then once the product finally hit the shelves, parents are finding their children eating the product thinking it’s candy, causing severe side effects and sending children to the ER. P&G has said they’re now going to put a better locking mechanism on the fishbowl container which houses the bright colored pods.

Chicago was a key market for the launch of these products so you may have seen the advertising including CTA station dominations as shown below.

Have you tried the product? Does it live up to P&G’s hype? What could they have done differently to try to alleviate some of these issues (or foreseen them)? And if this can happen to a CPG leader like P&G, is there hope for the rest of us?

http://adage.com/article/news/p-g-reinvents-laundry-150-million-tide-pods-launch/227208/

http://adage.com/article/news/delays-put-laundry-titan-tide-defensive-300m-pod-war/232116/

http://news.yahoo.com/tide-change-pods-lid-amid-child-safety-concerns-165556333–sector.html

 

When Forecasting Goes Too Far

Posted on by scottc301s12

 

 

 

 

I, like hopefully some of you, am a huge basketball fan.  Of course the early exit from the playoffs by our beloved Chicago Bulls was demoralizing, but I still find myself glued to the television and often cheering or cursing the players on screen during the current NBA final series.  While right now the Oklahoma City Thunder is down three games to one against the Miami Heat in a best of seven series, I have been listening to a great deal of sports talk radio over the last two days and most everyone is saying the same thing…  because no team in NBA history has come back to win a championship when down three games to one in the finals, Miami is going to win.

This sounds like forecasting gone too far.

Simply because something hasn’t happened before doesn’t mean it wont eventually happen.  No one can possibly know the outcome of the future, so why should we even try to predict it?

This makes me think about how some companies, especially start-ups, may have an extremely difficult time coming up with initial sales forecasts.  Who could have predicted things like the meteoric rise in demand of products from companies like Apple and Microsoft, or the rapid decline in domestic auto sales years ago?  According to MaRS, a Canaidian consulting firm, initial forecasting of sales is paramount to a strong start in a new business venture.  http://www.marsdd.com/articles/sales-forecasting-for-start-ups/  For a company to be able to properly allocate resources to things like distribution and storage of finished inventory, accurate sales forecasting can have a major impact on a company’s bottom line.  Forecasting sales too tentatively could cause a great deal of lost potential revenue whereas too strong a sales forecast can result in major expenses related to the excessive production.  This leads to what in my opinion is an interesting debate over what type of forecasting method to use, but also how much weight should you assign to those forecasts?

As we enter the final minutes of the NBA final’s games five, I have a feeling that in this case, the forecasting consensus may be right. Congratulations Miami.

Central question:  Knowing that even the most accurate and thoughtful forecast could be completely inaccurate, how much stock should be put into its creation?  What are some instances where forecasting is crucial?  When is forecast simply unimportant?

 

References:  “MaRS Discovery District.” Sales Forecasting for Start-ups. N.p., n.d. Web. 21 June 2012.

 

Cinderella’s shoe, does it fit everyone?

Posted on by nadaj502

Husband and Wife both are Six Sigma practitioners. Obviously, their daily lives conversations happen in Six Sigma parlance. The wife happens to be a very good cook, one of the reasons why the husband married her. Suddenly, three days at a stretch, the food starts to have extra salt. Husband objects, to which wife responds

“Common Cause of Variation”. One day, the wife adds a lot of salt to the food. Husband takes ill and is admitted to the hospital. Wife comes to see him and quips, “Sorry, special cause of variation.” Husband says, “It was Structural.”

Three days later, Husband hands out a divorce notice to wife and quips, “Process Unstable. Not meeting CTQ*.”
*CTQs are the internal critical quality parameters that relate to the wants and needs of the customer.

Thought of sharing this joke as I believe it will help us all in remembering few vocabularies used during our last session.

The last few session reminded me of one of the main product development projects that I’ve worked on, where we launched one product in 7 different markets, however we had to customize it a bit for each market in order to meet customer expectations in each of the 7 markets.
The product was basically a credit card in local currency, you may wonder what is so special about it? Well it was an American Express local currency Credit Card.  And as you may know, American Express is considered the most prestigious plastic card in the world, and it targets individuals with high expenditure patterns. Refer to this blog for American  American
Express’s Competitive Position.

As this may be very true for its main product “the Charge Card”, it was not applicable for their Credit Card target segment, which made the product development & marketing teams wonder of what would attract customers to American Express Credit Card rather than any other credit cards available in their market? Well the development team followed the differentiation strategy while designing the product. It was the feel of the prestigious card that attracted customers to it, in addition to the appropriately designed product that met customer’s expectation in each of the targeted markets. But how did the development team identify the customer needs? They utilized their existing data and referred to the Charge Card customer base, they asked them if they would like to hold supplementary Credit Cards for their spouses and children with a credit limit, and bang that was highly demanded. As loyal cardholders they didn’t want to hold many different brands of cards and also didn’t want to  provide the open limit charge card as supplementary cards to their family. Of course further focus groups were obtained then to identify the requirements of each market, and to develop a product that is different than the current ones in the market. Tremendous amount of work was held but it was worth it, the product was launched successfully and it was well perceived in all 7 different markets.

However, do you think what AMEX did for identifying customer’s needs in each market was enough? If not, what alternative ways would you suggest?

The Cursed Shop

Posted on by mohammedala502

“Beware of this haunted shop I heard there was a kid who once entered this shop and never came out. His poor mother lives in misery because of her loss” said Cousin Noah. I still remember that day while my cousin and I were walking passing by this shop located in Arad Town. It was before 20 years but I remember it like yesterday, this shop was called the cursed shop, or the haunted shop. Furthermore the title (cursed shop) came because whenever a restaurant opens in this same shop after a while the business shuts down. By time people started believing that this shop was really cursed, it’s funny how some people are naïve.

 

 

I kept in mind this shop and the different restaurants that opened there; I said to myself there must be a reason behind this. Further investigation in this case I found out the reason was simple; the restaurants did not have good forecasts for the demands of the customers. A restaurant would open to operate and they would order for example a large amount of Kebab given it’s a restaurant serving fresh food they would have many Kebab left unfortunately some were already grilled and been ready to serve, this is just one example. Of course the forecasting was not the only reason, given the place of the restaurant, prices, and demand of customers played a role.

I believe that this restaurant could have avoided the risk by using the forecast starting from Qualitative method (using surveys or even second hand information.)Also using the Quantitative methods to forecast the demand and base the price on the forecasts.

Friday (11th may) class was an eye opening class, I always wanted to know how restaurants were able to survive and know exactly how much portion of meat, salads , fish , or any type of food to prepare each day. From the class exercise I leaned that there are different types of forecasts that addresses different categorize like (Economic, Technological and Demand forecasts.)Furthermore each method is suitable for a different case or scenario. There are two approaches to this matter the Qualitative  including ( Delphi method , consumer market survey , sales force composite) , and the Quantitative method including  ( Naïve approach , moving averages , exponential smoothing , trend projection , linear regression. )Moreover the manager has to know what type of forecast to use because each approach will give an answer however only one answer is accurate and reflects reality.

 

 

CLICKER TIME:

 

Do you believe that Forecasting is vital for any restaurant?

  1. YES
  2.  NO
  3. I didn’t read the article I just want to comment for the 5%

What do you think is the best Quantitative method to use for the restaurant?

 

 

More on restaurants failure click here:

http://www.econ.ucsb.edu/~tedb/Courses/Ec1F07/restaurantsfail.pdf

 

Why Guess When You Can Forecast?

Posted on by luqmanm502

In the last class we studied the concept of demand forecasting and its importance in the business environment, especially in the 21st century. This topic was particularly interesting to me since I have recently experienced problems related to inaccurate forecasting at work.

I work for a supply and distribution company that deals with the fast moving consumer goods (FMCG) industry. While previously we had only undertaken the distribution of home and personal care products, recently our company decided to add several food product brands to our portfolio. This was a strategic move since we are experienced in dealing with various Middle Eastern retail establishments. However, the mistake our team made was to purchase the product inventory from manufacturing companies without accurately forecasting the demand for those products.

The Role of Forecasting in Demand & Supply Planning

The result? We ended up with far more inventory than we could sell. Food products are perishable; their expiration deadlines are much shorter than for other consumer goods. As those expiry dates approached, a considerable percentage of the inventory we had bought was wasted in our own warehouse. Needless to say, the company suffered some heavy losses.

Few forecasts are absolutely accurate since the future is inherently uncertain. To add fat to the fire, many companies still use informal forecasting methods such as educated guesses by top management and intuition or “gut feeling”. Some use quantitative methods such as historical sales trends and adjust it according to the forecasting officer’s own personal experience or opinion. When forecasting methods are based on such subjectivity, how accurate can they really be?

Demand Forecasting

Concerned about the accuracy of my company’s forecasting methods, I researched various forms of quantitative and qualitative forecasting. I came across an article by Kesten Green and Scott Armstrong of Wharton. The article proposed that only structured forecasting methods should be used and more qualitative techniques such as focus groups, unstructured meetings and intuition should be avoided. Even when some judgment must be used (possibly due to the lack of sufficient data), Armstrong and Green (2005) recommended that forecasts should be based on more structured procedures such as the Delphi method or structured analogies. The structured analogies method involves using results from similar situations from the past to predict the outcome of the current situation using a structured, formal process.

Even when accurate forecasts are made, it is not always easy to implement them in business decisions. When research results reveal figures contradictory to what the top management expected, they may even be ignored. To increase the acceptance of forecasts, decision-making managers can be asked to agree on what methods should be used before any forecast results are presented. The scenario approach can also be used; decision-makers can be asked what steps they will take in different possible future situations, before revealing forecast results. For instance, the managers at my company could have been asked what they plan to do if forecasts reveal that demand is considerably lower than our inventory of food products, and what if demand exceeds supply. This way, they are more likely to act on the results of the forecast.

Whatever the method used, companies should focus on maximizing the accuracy of their forecasts. In today’s fast-paced world where competition is ready to grab your market share at the slightest miscalculation, I feel forecasting is critical to business success.