• Optessa Shows How To Improve Order Fulfillment Even When Actual Demand Deviates From Forecast

    by it@optessa.com | Apr 23, 2017 | Uncategorized

     

    In a recent post, “Here is How Industrial Supply Chain Planning is Different” (April 12, 2017) Jonathan Cohen cites two surveys that highlight the lack of accuracy in demand forecasting.
    – Median demand forecast error for industrial supply chains is 26%
    – Industrial companies forecast accuracy is in the “high sixties”

    Cohen concludes, “The benchmark data showed a correlation between this forecast error and orders on-time-in-full (OTIF). Hence, more than half of industrial manufacturers delivered less than 91% of their OTIF, ‘highlighting the difficulty aligning supply capacity and inventory to demand across often complex product offerings.’”

    Cohen’s suggestions for increasing demand forecasting accuracy include
    – More collaboration in forecasting
    – More granular forecasting
    – Use of advanced techniques like machine learning

    These are transformational changes, and they can take time. Optessa offers a here-and-now solution to improve OTIF even when actual demand varies from forecast.

    Optessa offers a unique planning and scheduling platform to deliver more OTIF while working within the constraints of the supply chain, logistics and manufacturing. Optessa’s solutions have been extensively validated at 4 of the 6 largest OEMs in the auto industry, which has high product complexity. The solutions are applicable to any high volume and/or high variety manufacturing environment.

    Actual demand often deviates from the forecast, especially for complex, high volume environments such as auto. This ripples through manufacturing and the supply chain. In addition, there are any number of unplanned events. The immediate need is to fulfill the orders by extracting the best flexibility while working within the constraints of the supply chain, logistics and manufacturing (i.e. no capacity investments, overtime, expediting costs etc. while maintaining throughput) with software tools for planning and scheduling. With the right algorithms this is easier to implement, and the benefits are realized more quickly.

    Flexibility enables better OTIF, even if actual demand varies from forecast. Flexibility derives from the ability to map every planning and detailed scheduling constraint into the Optessa platform combined with powerful patented algorithms to rapidly find optimal solutions.

    One auto OEM was unable to use the entire global capacity for a vehicle line by a factor of over 4%, due to actual order specs varying from the forecast order specs. This resulted in stock orders being planned instead of actual orders leading to revenue loss and reduced OTIF. With the same data set Optessa reduced the factor to 1.6%, which is a significant benefit for high value products like cars.

    In the case of another OEM, and at the completely different level of the weld/body and paint operations in an assembly plant, Optessa technology was also able to improve order fulfillment. Here is what the users had to say:
    “Able to create schedules after “Emergency” pull of units due to parts shortages. The pulled units can be scheduled with Optessa vs manually inserting them back.”
    “Instances where a stamping die went down, and previous to Optessa these orders would be returned to the Marketing group for rescheduling. With Optessa … was able to keep the affected orders and re-sequence them as the plant became capable.”
    “Able to schedule daily to react to production over/under builds. The process is fast enough for the scheduler to actually create schedules based on each shift.”