Why don’t you have these in stock?
Why do you have so many of these in the warehouse?
Why is your fill so low?
Do these questions seem familiar coming from members of your management team or your customers? Of course they do! They are constantly asked throughout the year as we all try to balance customer expectations and fiscal responsibility by managing inventory at the appropriate levels. But with so many variables within the supply chain how can we accomplish this goal?
It is no secret that forecast accuracy is connected to inventory levels; therefore, the more accurate our forecasts the lower our safety stock. This frees up capital for other parts of the organization. So how do we improve forecast accuracy?
I strongly believe that building a collaborative environment in our organizations as well as in our supply chains is the best way to achieve the lowest possible forecast error. By building a cross-functional collaborative environment of all stakeholders we can proactively identify and control the associated variables of both the forecast and the supply chain. For example, consider a large promotion where product is heavily discounted. By leveraging the relationships with our suppliers, internal marketing, sales, and distribution network we can proactively work to maintain lean inventory levels while ensuring product availability to our customers. With this coordination we can obtain information from our sales teams to gauge potential interest in such a promotion, and ensure that the marketing information is available to our customers so that they are aware of the timeline of the promotion. Plus, we’ll know if our suppliers are capable of supplying the product in a timely manner and that our distribution network has the capacity to receive and ship, ensuring overall customer satisfaction.
At Navistar, we are constantly looking for ways to improve upon collaboration within our supply chain and forecasting efforts. We have recently implemented a new supply chain system that exchanges information between Navistar and its suppliers helping us to have the right part, at the right place, at the right time!
I look forward to expanding on these concepts and sharing Navistar’s implementation experience with you at the IBF’s Best Practices Conference in October!
Navistar Parts Group