Streamlining pipeline integrity data management for inventory

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he called subchaine and co-founded uh sku science which is a demand forecasting platform um and he also teaches at universities in paris france and brussels um and continues to coach and train practitioners on these topics we're going to talk about today so a wealth of knowledge there and we will um kick to him first but before we get there um barry cook is our is net stocks chief technology officer uh and founder of netstock which is a technology company that that focuses on uh exactly what we're talking about today he's based out of johannesburg uh south africa and uh nicolas being out of brussels by the way um and and he's got a load of experience 23 plus years of experience um working with organizations of all sizes um he's got a perspective here that he's going to bring to the table um i think you guys are all going to really enjoy and and he's responsible for all customer facing technologies at netstock um and there's some of his information if you if you want to connect and and learn more um and with that nicholas i'm going to start oh no i'm going to go over the agenda so we've got a like i said we've got a packed uh agenda for the day uh we're going to talk through the five best practices for 2022 the importance of inventory management prioritizing your products we'll get into some classification around abc xyz uh reactive versus proactive approach and then then we're going to take a little bit of a step back and really talk about the supply chain shift and and what's the what is the modern way of looking at inventory within today's environment um and then um we will open up for q a at the end so we're looking at about 30 minutes of presentation time about 15 minutes of of q a something like that um is what we're going to shoot for so with that uh i'm going to stop sharing and pass it over to you nicolas thanks okay great so you already introduced the engine there so my parts would really focus on these best practices for inventory and management um to to start with i would just like to introduce the subject of okay we all like eventually you won't work for a different supply chain but why do we have inventory and what are the costs of having this inventory maybe as i present this slide ninja would you mind opening the the bottom zoom to take the temperature of the room um so for all the participants we have some question for you that we will ask through zoom so we can see um where the the crowd stands um today so let's start with the first question now maybe you should see that yeah great uh no that's not the question it's another question i had in mind [Music] no that doesn't seem to work yeah i lost control of being able to do that just i just um i'm perfect here's the question okay so just to start the the conversation i wanted to take the temperature of the room so we have here a question just to ask you how it is going with inventory if you feel like you have too much inventory right now or you're facing um shortages so as you reply to this question and you you can see it on the board right now i will just move on with the the the slide so why do we have inventory as a supply chain so what we want to have is just to have the right amount of inventory if it happens that currently you have too little inventory and you face shortages basically what happens is that your clients are not satisfied and you put too much pressure on your prediction capabilities right so you're gonna put a lot of pressure on your factories to produce more to get more flexibility to do extra hours you might need to do some uh fast shipping expedition and so on so transaction costs are gonna get higher and higher and you're gonna face shortages okay now on the other side you want to say okay having two little inventory sounds quite bad so i'm gonna order as much as i can and i'm gonna stock my adventure so what happens then is that you have the risk of having obsolescence you have the risk of having dead stock excess inventory it's gonna take space in your warehouse you might even have to open a second warehouse to rent extra space and it cost a lot of money right so not enough inventory it's gonna cost you money too much inventory it's gonna cost you money what we need to have is just to have the right amount of inventory now obviously if you have the right amount of inventory you're going to reach a certain amount of service delivered you're going to have a smooth ordering process either internally with your own factories or towards your supplier and you're gonna be protected against any supply or demand uh variation that's just the right amount um i think it's important to understand this slide and to understand that inventory it's kind of a trade-off right um people that would always tell you you need to have less inventory less inventory less inventory it's just it is just going to put too much pressure on your supply chain always having less inventory might not be the best id you just need to have the right amount so i don't know if you can see here the result of the per so we could see where you stand today uh do we have the result i don't see it so maybe let's go to the next slide and we'll see later if we can go um back to it okay so now i set the scene and we understand that okay we need to have the right amount of inventory in our sublaunching um a subject that has been close to my heart for the last month it's really that as human the time we can dedicate to work is limited right you don't want to work 24 hours a day and then you cannot possibly review every single product you are responsible of right so somehow when you start your day you should spend time on a few critical products okay and that's very important for me and i think that when we design models when we design dashboard interface and so on we should make this model and dashboard to support us the human so we know what to work on um next um now when we talk about this a lot of people are gonna say well i need to do this abc xyz metrics so i know what's the most important thing i should focus on and i'm gonna work first on this kind of uh most important item now again nadja would you mind opening the the ball on zoom so we can discuss a bit abc xyz with everyone to see where people stand in terms of abc xyz do we have the burn yeah we're having some technical difficulty there so we might just have to ask the question and write it in chat oh there we go yeah great so for those of you who use ab6yz you see the question now and i just would like to see with the code what kind of information you want to display on abc xyz when you want to review your inventory product if you don't use it you can also click on the option no i'm simply not using this tool um now as you reply to this question going back to my slide when we set up such a classification we basically want to look at two things which are the most important product from a supply chain i'm not answering yet how we do that but let's say that's something we want to to know and the second thing we want to look at is where am i likely to add value in the sense that if you review your inventory policy or if you review your current orders you run to you want to review first important product and you want to review first things where it's likely that you're gonna make it better you get you you are likely to add value right now i i just um hosted a webinar abc xyz a few weeks ago and we discussed abc xyz for demand planning and forecasting and when we discussed this for forecasting the conclusion of this webinar a few weeks ago was that it was important to focus on products where the forecast stability was slow so your forecast engine had a lot of difficulties in the past and you should focus on the product and review this product first because it's likely you're going to add value to these products okay now this is something that works for demand planning but for inventory management it might not be the case okay i got the result from the pulse thank you so much for answering that i see that we get a lot of answers nearly 200 that's that's amazing thank you i see that a lot of you are saying i'm i'm printing their historical volumes and sales some of you future forecasts i love it that that makes a lot of sense to use future forecasts president historical volumes so that's great let me try to to push a bit more um to to to refine abc xyz database first if you're really interested in the subject i said a month ago i hosted this webinar just on this subject so you you can always go back to this webinar to see how it can be used for demand forecasting but here i'm really gonna focus on um inventory management now one of the best one of those sorry one of them very important question when you set up ab6 it's really like what kind of information am i going to use and display in this metrics and you see now that i'm asking this question maybe you're thinking i should show sales i should show volumes i should use the forecast and so on so it's a lot of things you could possibly use but it's not really clear which one is the best let me try to to to show you here some of the limit of abc xyz especially in terms of inventory management i think for demand planning it's quite solid for inventory management we're limited so it is six why is it it's great because it's simple and it's a simplification tool and and we love it because it's simple but it also contains some um limitations um first you only have two dimensions and our supernatural are not two dimensional objects we have a lot of things we need to pay attention to so it's kind of difficult to boil down to only two dimensions on top of that abc xyz you just have two threshold per dimension so somehow you're kind of limited right um what i'm really advising especially for inventory management is start trying to review product based on something i would call smart multiplication segmentation um for example something that's critical for inventory management is the supply reliability products where you cannot trust your supplier or you never know if your supplier is going to be on time you should review these first you should call first these specific suppliers because you cannot really trust them so your model doesn't know what to do right so in ab6 we said we would need to add a third dimension with like supply reliability but it's kind of difficult to do right um in terms of inventory management something else that's very important is this shelf life i receive a lot of questions um for from snlp leaders who deal with shelf life issues it's really difficult to deal with that in the food industry chef5 is putting a lot of pressure on people as well so if you have products with shelf life they should also get more attention um and then remember when i started these questions but which product should we review first i said well products that are important for you for example shelf life product with the supply supply is limited but also produce where you're likely to add value where you're likely to do better than the um so typically those would be products that are brand new so forecast is quite bad or you have some promotion so you need to do maybe a specific deal with your supplier or you need to do a specific production batch and it's maybe product where you can collaborate with just your buyer or your client for example it's a product you know your supplier is not reliable but you also have the phone number of the suppliers so you could directly call the supplier to see what's going on this is typically a product you should spend your time on now and this is one of the main point of this presentation we should also focus your attention on product that we are expecting some shortages or we are afraid we are going to face some shortages or products for which we already have excess inventory these are products where we have um problems right and we want to focus on the program on these programs and as a human we want to go there and fix these problems okay we're gonna move now to this subject um so ninja would you mind to show the next question on this zoom great so one of the things i want to put forward is this in this webinar is the question of being reactive versus proactive in our supply chain the question is quite simple do you act on shortages in excess inventory once it's already there so you're missing some inventory and then you realize that you should call your supplier to expedite something or instead are you corrective in the sense that today you have inventory in your warehouse today you're good but looking down the road you see that in three weeks you might face a shortage and you know that usually it takes one month for your supplier to deliver something so you know that in three ways you're gonna be in trouble and you can act right now see so these two things are really different i want to push you to go to this proactive zone where today you'll find today the product is doing great but the tool or your model would already know that in a few weeks you're gonna face an issue and you need to act now even though right now everything is fine um okay let's just wait a few seconds to see the result of the butter and then we can move on to the solution right okay great perfect so um in total um seventy percent says i don't know sorry sorry sorry yeah i know 70 percent says well we we react when it's uh when when it's too late i know i'm not reading that well we're right when it's too late 30 percent and we react before we usually do it before it's too late it's also 30 so it's nearly 60 percent of you who says well i'm much more in the reactive zone where we tend to we see there is an issue and then we try to fix it rather than we fix it before it happens okay let me show you a way out of this so the idea here with inventory management is that we want to act on problem before they happen so in the end nothing happens right we want to act before anything turns out badly before we have access inventory before we have that stuck and before we have shortages um let me show you an example on how this could work so you have to imagine [Music] a dashboard a data model an inventory model it doesn't matter really how you call it that knows that you have different product hammers envelopes nails screws if you attend my webinar you know i'm always taking this same example i do not sell hammers i have to say i don't have any promotion related to hammers but i love the example so here the model will know how much inventory you have on hand in your warehouse right now but also how much inventory you've ordered already to your suppliers like basically how much is already being ordered and on the way to your warehouse if we would make a more complicated example we could even add the date when you're gonna get the next order so this tool could give you like a status you know with a green light an orange light and a red line telling you okay is this good or is this bad now what's interesting is for example um enviumes you have five but the tool knows that you have zero in transit so you didn't order any and based on the current forecast the tour can predict that you'll be out of stock by the time you receive your next order even if you do it today so this tool is telling you well you should pick up your phone and you should call your supplier to see what you can do about it because today it's fine you have five but usually it's gonna take well for four months for your survival to deliver so you should really call the supplier right now so you see how you can fix the problem before it happens same for the names you have one thousand five hundred but you have three thousand coming to you in your next order and the tool knows that three thousand is too much based on your current forecast currently time you don't need to order two thousand so the tool is basically advising you to call your supplier to see if you can delay the order cancel the order or order something instead of these names right so what you see here is basically data and automation and models working hand in hand with human so the tool is really advising you to act on a few problems where you as the human you can really add value and you're not there just you know to update manually things um in excel now two things are important here um first is as we automate this as you update the the forecast because the demand planning team is is creating a new forecast or maybe the forecast is automated maybe you review the lead time of your supplier as soon as you do that the mother knows that the situation might change maybe as you update the forecast for i don't know names well the two knows but then you don't have too much nails you just write with the right lever so you don't need to call your suppliers anymore right and all of this is automated based on the lead times based on the forecast and every week every day the status gets updated for everything and you can even imagine this with this um information from your supplier that would really say when they expected to deliver the goods so you really know where you stand today and if you need to order some more um there is something else here that that's really really important this will only work it will only work if you have a very good inventory optimization system if you do this but you don't really have a clue on the lead time the relationship between the lead time and how much you need to have you have no clue on how much safety stock you need to have and so on you might have desired you might have this green light and red line it's just that it will not be properly defined right so before doing this you need a lot of data but you also need to have the right inventory optimization model otherwise it will not work so if you want to reach automation if you want to reduce your workload reduce excess and reduce shortages you need to have the right data and you need to have the right inventory optimization model okay um let me move on to the next slide we will discuss question obviously after the the presentation okay so as said to do what i just highlighted you're gonna need a lot of data so as soon as we have the input data we can create an inventory model and once we have inventory model we can do this kind of automated dashboard that will help you to know what you need to act on um next and this is where you get this automation and you reduce um shortages in excess now the issue with this kind of model that you should the challenge with this kind of model would be what kind of data and the amount of data you need to have you need to have data about your supplier master data you need to have the forecast historical demand and so on all the orders coming to you and so on so it's a lot of data that needs to be fed to this kind of automation system and this is why you cannot really maintain such a thing um in excel because it's too much input that are required for this to run properly let me give you an example um because actually i'm i'm quite worried in supply chain in general on the amount of time we spend at collecting the right lead time data from our suppliers and i recently hired a first employee i did a a supply chain data scientist to join me in my consultancy company associates and he asked me what what what's difficult in this project i said the most difficult find is not to create the model it's to deal with the lead times from the suppliers because a lot of supply chain do not track exactly the lead times they don't really maintain well the table about the lead times and if the lead times in your data management system is wrong you can have the best model in the world it will simply never work because the lead time is wrong and lead time change over time right um let me show you why the times are so important um so here on the right side of the screen you have an inventory policy it's quite a simple one um you know you have this on hand inventory in blue here and when it goes below this order point level you make an order and you you get a delivery after a certain lead time now when you have an inventory optimization model you want to define okay but what's this order point like where should it be where should be this order level um when you do this order level most people think about safety stuff maybe right now you're thinking okay it all depends on the safety stock and this kind of uh maybe you you know the z factor and the service level i want and so on yes it's true safety stock is part of this order point but on top of that you also get a buffer against the lead time and this is very important and people tend to forget about that so when we have the order point and you can see that on the side i also need to be sure that i order in time so enough inventory to cover the demand over the lead time now obviously if you type in your system lead time is five days but in real it's 10 days you'll be out of stock by the time you receive your delivery and then you get this kind of issue right so again in short if you want to automate inventory management if you want to work on alert um if you want to avoid shortages if you want to avoid excess inventory and dead stock if you want to reduce your workload you absolutely need to work first on your data and then on this inventory models finally to get this dashboard um okay so finally another thing that's very important for me in terms of inventory management it's the collaboration you can do with demand planners you know as an invention manager you need to assess the risk the supply reliability and the safety stock you need to deal with all these supply orders coming in and your stock target preparing for promotion seasonality and so on but you need to work hand-in-hand with the demand planners that's gonna who are gonna prepare all the forecasts so it's very important you spend time with them on the product that you think are the most critical again most critically based on shelf life supply reliability and so on um something that's very important with demand planning and and not a lot of people are pushing this forward pushing this subject forward and it's something that's really close to my heart in my books and so on is the question of this what i like to call the risk horizon when you forecast the product it's very important that you forecast it over a horizon that's long enough so you're sure that you can do your order in time i've seen so many supply chains saying we only forecast at m plus one or m plus two or we only focus at m plus three but actually they need to meet they need to make orders to the supplier for six months ahead so this obviously does not work as an inventory manager it's very important that you show this date time to the demand planners so they really know what's the horizon that you are interested in okay um now to conclude this presentation i would say that going forward what we need in terms of inventory management is we need to have the data we create the model and then we have the dashboard that help us really to work on this alert and become really proactive avoiding these excess and obsolete inventory okay and this is really what i would call inventory planning excellence okay um as demon as inventory planner sorry i think it's very important that to understand that we should be here to run the business call the suppliers check on these orders but we should not be here to just maintain massive files in excel and do vlookups and private tables all day long we should more spend time avoiding that any um yeah shortages or excess inventory happens in the future residents spend on time maintaining files and except i've seen so many people in supply chain and i'm sure that most of you exactly see what i mean spending the day on excel maintaining these massive files with 10 15 20 sheets and spending then they're just trying to maintain the excel and basically praying that the excel does not crash okay we should not spend our time doing that we should spend a time calling the supplier making sure that we get these deliveries in time okay so the idea is that we want to act more and we want to act before the problems arise so and by doing that we let the model automate all the rest so we get less workload okay so and i really love this sentence it's not about working harder it's about working smarter okay and let the tool automate in us to demon the inventory planner we should just focus on these um errors um to finish this presentation um ninja would you mind to open the last um about the next steps yeah great i love to finish these webinars with this kind of question to kind of inspire you on what to do next because we just discussed a lot of topics i've been talking quite a lot and we have the opportunity to discuss questions but i think it's also very important that you kind of set yourself what's my next step what's the next thing i should work on to just improve the situation here um and i think it's also great that we can take some time to discuss that and yeah try to inspire each other on doing these uh next steps let's maybe see the result in a few seconds and then i can leave the floor to uh great and i see that 36 percent of you want to try this area-driven inventory management that is absolutely great i could convince a lot of you that you need to check data i said if you don't have the right data it's going to be very difficult to automate anything or to do a model because you know garbage in garbage this is like the the right example um and i'm also glad that for 17 of you everything is working fine and i think it's also great to say that at some point you found that but i already do this so that's great i think it's great that for some of us we already have most of these um best practices and i'm also glad to see that the rest of you are thinking okay i can move ahead i just need to do that as my next steps um that's great thank you so much berry the floors is the floor is yours okay josh if you want to just start the second half of the presentation on screen um hi guys um and uh thank you nicholas that was that was really amazing um i thought what i what i would try um today is as like like josh said take a step back and understand why do we need all of these systems and you know all of these systems that nicholas just talked about is really really important and the reason for that is because in the last 10 to 15 years there's been this massive shift in supply chains that a lot of people i think haven't realized especially kind of the mid and smaller size business um haven't realized that and this shift has really come from the big guys like the amazons and the walmarts of the world and and the shift really is that they have started looking at mountains and mountains of data and using that data uh you know to optimize their supply chains to optimize their retail channels to make things a lot more smooth and running better and the way they've done that is they've just thrown money at it right so they basically said we've got all of this data let's employ thousands of you know data scientists um to to help us to optimize um our supply chains and the result is that you know they have become a lot more um competitive in the market and they've left a lot of other competitors um you know in with a problem so um how are they more competitive um they are competitive by looking by by reads but by training their consumers to expect that they will get everything exactly what they want when they want it and where they want it and the consumer doesn't have to think too much about that josh just on the next slide and and what's happening is that um because everyone is not trained to hey i can just get whatever i want whenever i need and and guess what it's always the right thing at the right time and it's never stuck out and i can get them in the same day delivered to my door the problem is that that consumers are now expecting this so they've been trained to expect this and if you want to compete um you know in the market then these things are table stakes right if you if you think you can still go into the old way of doing that um josh if we can just go to the next slide um you know the the old way are they are the other companies that think that they can say to the consumer listen this is our range you will like this range we will market this range of items to you and because you are brand loyal to us you will buy this and that's changed you know it's wrong people don't don't operate like that anymore people are now on the on the page of uh listen i don't care about your brand i care about whoever is going to supply me with the right thing at the right time when i need it and not try and shove things into my space that i don't need and and a lot of the older companies have have really really struggled um to get to grips with that i'm not saying all theirs and companies that are old i mean amazon is pretty old in comparison with you know the new companies these days but companies with old um type of thinking um so you know they just can't compete with with these kind of guys but um you know what i'm thinking what i'm seeing is that a lot of the companies that are you know not amazon and not walmart they can actually also compete in this in this arena why can they compete um josh just next slide please because we all have a lot of data from our erp systems from our accounting packages and our warehouse management systems and so on but we don't necessarily know how to take that data and convert it into you know these best practices like what nicholas was saying i was looking at some of the chats while nicholas was talking and you know even simple things like classifying your inventory into abc xyz is daunting if you don't have you know systems to to help you to do that how do we do that um and the problem is that you know going um and and when your business starts growing um like nicolas said excel becomes a liability where when you're a small business it's it's like your superpower right you have 500 items or you have 200 items and you've got this nice big excel spreadsheet and it does everything for you suddenly you have 10 000 items and excel can't do that for you anymore so um even though you do you do sit on all of this data it's very difficult to to make use of that in the way that nicholas was was explaining earlier um so what do people do well they they write some reports or they get their erp provider to or consultants to provide some reports um and that that works you know well for a while um problem with reports is they always look backwards they never look forwards and understand what's going to happen they tell you they tell you exactly what has happened and you like your thank you i know that but what what should i do today or the next thing they do is they they get a bi product right so okay let's connect a nice bi product to our erp system and now you're sitting with the problem that amazon had 15 years ago i need you know 10 data scientists to help me to make this bi tool do what i need to do and so either you don't have access to those data centers they're very expensive you know employees or you know the data scientists don't understand your business or don't have the knowledge of inventory best practices so they can build what you you know might ask them but that they won't be doing these things in the way that is the the best way to do um so um you know like i said in on the next slide this cannot be done in excel once you get to a specific size because if you get to that scale you know you need something to automatically look at at things every day and you know excel can can get you so far but you know doing the analysis doing the forecasting for the next 12 months and guess what the next 12 months is not good enough anymore people now have lead times of you know a year nine months a year you know a year and four months how do you how do you do that kind of forecasting in excel how do you get your abc xyz in excel when you have 50 000 items how do you understand what is your real lead time um in an excel spreadsheet it becomes really really difficult so our um mission has been for the last you know 12 years to build systems with all of these best practices built in and those systems you know our system will take and connect to your erp extract all of that information and automatically do all of these best practice stuff for you so that in the end at the end of the day like nikola said you can be someone who just goes and works on the most critical things but there's a system in the background that will actually um you know do all of the the grunt work for you um so uh josh if we can go to the next slide um you know our net stock system has all of these dashboards built in so for example like nicola said you want to see where you've placed an order that's going to be too much that you know and and which items are there and we and can we go and fix that you want to see where we potentially going to stock out instead of oh we already have stocked up now what right so if we can be proactive and if you can get something to alert you to say please go and look at these items because you might have enough inventory on hand today but you might be stocking out you need a system that automatically classifies your your inventory into the matrix every day because guess what you might be doing classification exercise um and in three weeks time that's out of date because suddenly uh items are now different moving differently or they selling more or less and so on and suddenly they're not the a item anymore they now maybe the b item you need a system that can automatically do the grand forecast work for you every day and you know allow you to just go and pay attention to the items that the you know computer forecast can't get that you know right so well you need a system that will automatically measure those risks that nicholas was talking about can i forecast this item properly if not we need to put some safety stock in because we might be thinking that we you know sell a certain amount in the month but we're actually going to sell more how reliable is my supplier what how do you how do you understand it what how do you understand when your supplier's lead time starts taking off you need to measure every single item every single delivery every time it comes in and say right the the supplier said it's going to be in 60 days it took 75 days now it took 80 days now it took 100 days and based on that risk profile adjust how you do your ordering because if you're still going to order thinking that you know the inventory is going to arrive in 60 days you're going to run into a massive problem so can we automate all of those things um in a way and that has been our mission we also want to arm the the smaller guys the you know the guys that are not amazon and are not walmart with the tools to also compete in the market because that is important and we realize that it's very difficult to do that if you're not at the scale of those big guys and i don't know about you but i don't want to live in a in a world where you know the only two companies that you can buy anything from uh is left are amazon and and walmart i want to have a vibrant community of smaller companies that are also producing um you know goods for us and help us to to to have the right stuff at the right time so that's our mission we want to arm people with with with these tools so that you can also compete in the market thank you josh all right thank you barry thank you nicolas we will now get to some q a i i just have to say i love the chatter back and forth this has been a lively group there's a lot of questions that have been asked there's people want to start user groups this is great stuff uh bringing people together so i will do my best to go through questions that were in the chat there is a q a um section which organ organizes it nicely for me so if you have any other questions please feel free to put them in uh q a is probably best frankly but uh chat works too and we will do our best to get back to you if we don't get to it now because we'll do about 10 minutes um we will do our best to to get you an answer post webinar uh here i there's been a lot of questions too we will send out the recorded version for everybody that registered for the webinar webinar feel free to share that out with your your team members who may or may not be here right now um so with that let me go back to my notes and there was a lot of early on in the presentation we we talked about uh lead time so one of the questions was if all products have a near or or similar lead time then would it be prudent to only use historical demand as uh the drivers for an abc xyz um categorization and i'll i'll give that to both nicholas and barry to uh to answer um actually i i would not advise to to do that so when you set up a dashboard including abc so i said but not just abc xyz um you want to highlight important project important projects i think that are going to be important in the future with a high forecast high value in the future not especially high forecast and high high historical sales and high value in the past um you can face seasonal seasonality for example something's gonna be a high runner in march but maybe the season was pretty low in december november october so on your abc if you do it based on historical demand it will be rather low okay you can have trend you can have products new product and product dying so your top seller of 2021 will definitely we will definitely not be your top seller of 2022. so uh in short i would not advise you to to use historical sales in ab6 for sure absolutely agree you always have to look to the future otherwise you know that's like looking in your rear view mirror and trying to go down the highway you can head for a crash great thanks another one was how to automate this smart multi criteria analysis uh do you build a sort of matrix so i think that was going back too that was early on in the presentation talking i think it was about the abc xyz um side of it so i'll give that one over to you yeah sure so i said it's very important to understand in a supply chain it's not just about products that have a high forecast a high value but you want to check all this product where you can collaborate with your supplier price that have a short shelf life and so on and so on obviously all these criteria depends from one um supply chain to the other i might be talking to a new retailer they basically cannot possibly discuss with their clients on the other hand some of you have shell five some of you do not have such a thing so it's really a case-by-case discussion where you need to set up what are the criteria that makes sense for me that would highlight product that i need to review first um again it might just depends on your collaboration with your supplier and your client so it really depends on you um another example is this um business critical product maybe you have a product it's kind of low value you don't sell a lot but it's critical for your business because if you run out of this um most of your clients will stop buying other stuff maybe it's a piece for maintenance for example again it's all discussion that we need to have one by one business my business um thank you uh there was a few comments so i think these weren't exact questions but i think that the the point is here so people are struggling with lead times over the last you know 24 months because of the huge standard deviation and just the the multiple variables that are are at stake and that leads to untrustworthy data so how do you look at doing something like this with volatility in the market uh if you're looking forward and knowing that there's going to be volunteers about uh you know but you go you don't know what it's going to be so how do you address that maybe we'll start with you go ahead nicholas you know it this is a really important question and a very difficult one to say that there is no uh black and white solution or magic secret that you would apply it and then it would work so it's it's kind of a difficult one um it's also one of the things where you as the human in some cases you can be much smarter than your mother your mother might say well in the past this fire took three months to deliver but then on a specific day you should buy calls and tell you okay we really face an issue here whatever the issue is it's going to be six months going forward this is one of the cases where you as a human you need to go in the tool and say it's gonna be six months instead of three months for example um now again you cannot expect human and you cannot expect model to foresee the future i i've been working years and years on machine learning and demand forecasting and data science and so on we do not foresee the future in february 2020 you could not have forced incovit and you cannot expect your team or your model to know that right so at some point if you really want to be on the safe side you need to think okay how do i etch these risks can i get two suppliers can i get another one for safety stock and so on [Music] yeah i absolutely agree nicholas um you know there's uh if we could produ you know predict the future that well um you know we'd probably be writing softly uh to to buy stocks on the stock exchange right and make a lot of money so it is not possible um but absolutely so going back to your point when your supplier in a communication with your supplier is always very very important so if your supplier says listen i've got a problem it's not going to come through or it's stuck on the ship or it's in the in the ports or something go into your erp and update the expected lead time or the expected arrival date because that allows your inventory system to then look at it and say okay now we know that that inventory is coming at a different date than we originally thought now there might be a time in between where we're going to be stocking out is there something we can do can we you know move it from another warehouse to this warehouse because they might have access in that way else and we should shorten this or is there another supplier we can we can use can we fly it instead of ship it in it's going to cost you more but is it going to cost more than losing the sale so there are a few things that you can do but you know we all in the same boat unfortunately excuse the pun um everyone around the world has got massive lead time problems and you know until these things start start um improving you know we're all going to be suffering what i can say is that the biggest the biggest losers with this whole supply chain issue are the companies that in the 80s we were so impressed with the just in time [Music] ordering and you know there's a big big difference between just in time and just too late and the problem is if you don't have any safety stocks then a big shift like this in lead times can really really affect your business i mean i've read articles of ford motor company stopping production for six weeks because i couldn't get inventory uh into the into the warehouse now if the big guys like ford is struggling with this then you know the rest of us are definitely also struggling so yeah thanks barry uh we'll we'll try to get to one more here and like i said we will we will do our best to reach out to everybody afterwards and answer the additional questions but um by i believe is his name asked i would like to ask how i can integrate the demand forecast into the inventory replenishment uh and he says most people will use the historic demand but if i use the demand forecast my order quantity is equal to the forecast so passing that over yeah so so what you need to do is is what nicholas said earlier is you have to look forward a number you know a number of days so you have to look forward um first of all your lead time because where we're going to be if i order today what's my stock on hand going to be then you want to add your safety stock to that and then your replenishment cycle so how often do i want to you know reorder the stuff and if you add those things together you might come out at a 60 day or a 90 day or you know these days 360 day and then you look at your forecast over that time period okay so if i'm gonna in the next 60 days sell uh 500 units altogether then okay we are where am i today where's the 500 what's the difference and then order up to the to the maximum there so that's how you look forward using a forecast instead of looking backwards to what we used to sell in the past yeah i think as a as a general comment and i see this in in the training courses i'm hosting with some companies it's extremely important that we connect forecast and inventory planning if you disconnect forecast and inventory planning your maturity level is really really low and this is one of the first one you need to work on so um for these 200 people listening to us if right now you're thinking in my supply chain my inventory planner or supply planner do not use the forecast from the demand planning team it really means that um let's see from the bright side you have room for improvement and bear with me these are the next step you need to to to do is basically to connect these two together right well thank you everybody thank you uh nick loss and barry um very informative uh there's so much to dive in here it's hard to get it packed into it you know a 45 50 hour minute chunk right so um again we will continue the conversation um after this uh you can connect with the speakers there you can connect with me as well uh our linkedin uh links are there um and and we can again continue the conversation but thank you so much for joining our best practices for for inventory in 2022. um we will continue to produce content like this throughout the year or so we we we hope that you you guys continually join and and and we'd love to get the feedback on how helpful this was for you so thank you everybody have a a great rest of your day wherever you are in the world cheers thank you everyone bye [Music]