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sinha.rk.dr@gmail.com
‘Stockouts and obsolescence are caused by poor forecast accuracy’ is an erroneous assumption.
One of the most prevalent erroneous assumptions in supply chain is the belief that stockouts and excess inventory are both caused by poor forecast accuracy. If only we could improve the accuracy of our forecasts!
The fact remains that forecast accuracy, as measured by MAPE at the granular level, continues to hover around 70-80% for most companies and has remained so for more than three decades now. While sophistication of the forecasting process has improved substantially with the use of AI and ML techniques, market volatility has caught pace with it, leaving the accuracy at roughly the same level.
We should challenge this assumption and realize that inventory mismatch is actually caused by wrong stock deployment policies, coupled with the fact that rich market feedback coming to us every day is often ignored.