CPSM Blog

ESI and managing forecasted data with suppliers

This final section (2-A-3) of managing the forecast data with suppliers is the last section in forecasting and to me,one of the most interesting ones. Early Supplier Involvement (ESI) is again discussed in the context of data sharing. To have successful ESI and in turn, improved new product designs, forecast data and other relevant data needs to be shared with suppliers. For both legal and strategic reasons the best way to manage information with suppliers is to test if you would normally share such information with your market competitors.

Finally the section moves to collaborating with suppliers with  Supplier Managed Inventory(SMI) and Collaborative Planning Forecasting and Replenishment(CPFR).The latter is common in retail contexts like Wal-Mart and Sara Lee while the former (SMI) can very well happen in manufacturing environments like auto etc.

Supply forecasts based on economic,competitive,technology,market and currency trends

This section (2-A-2) is rather long and covers a variety of aggregate data sources that allows the supply manager to make some calls on what the prospects will be for her/his product category. Among various data sources the ISM Report on business is an important source of data. The data consists of leading indicators that allow prediction and second the data compares monthly data and therefore is of a much narrower time frame compared to other reports.

Macro and Business issues in Forecasting

I still needed to write about a few sections of Supplier Relationship Management in the Foundations of Supply Management series but today we got a reminder about the CPSM exam dates. So it's a bit of a rush and I thought that this blog should move forward with the Exam 2 material viz. Effective Supply Management Performance.

The first section starts with discussion about the macro factors that the supply manager must consider when forecasting requirements. These macro issues include trends in industries,firms and markets including an understanding of business cycles and the nature of the flow and ebb of economic tides. Typically a downturn might lead to a recession, like now, but the good  news is that  economies  will come out of recession. Understanding the type of cycle and its potential duration can help the supply manager in examining the situation with respect to her own industry and suppliers. Other trends that seem rather relevant at this time are Transportation trends,political stability/instability and environmental trends with each trend being examined for globally dispersed suppliers.

The market analysis section and supply market and complexity section both deal with business level environments like Porter's five forces, SWOT analysis and the Kraljic model in so far that they help in understanding the forecasting context for the supply manager.