21 Mar 2012

Is Statistical Modeling an After thought?

Is Statistical Modeling an After thought? 

I just had a conversation with a Fortune 500 executive recently.  He mentioned his company is spending tens of millions of dollars currently upgrading from SAP APO 4.0 to SAP SCM 7.0 Demand Planning.

Come to think of it, what are the big differences between the 4.0 or 5.0 vs. 7.0?  There are some marginal improvements that the tech shop may admire but anything for the planning community?!

Then we also hear that the planners have not been using the Statistical modeling feature in APO.  Will upgrading to 7.0 persuade the planners to use the Stat Models more?  Not just more, just even barely?  Then I hear a pause and the IT consultant says that Stat models are not a priority given the budget constraints they have.

So more millions before and no stat models.  Now five years later, we have a shiny new upgrade and again the Stats are not a priority.

I have been preaching Usability for the past few years.

Put together fine tools  – But help the users in making the transition to the tool – give them better understanding – Make the new tool more usable!

Give them the reports they need.  Provide them an exception based workflow!

APO has good statistical models.  They will help you move the peanut forward but only if they are understood and leveraged.

We just re-launched the marketing campaign for our Usability Consulting.  Model tuning and model matching to product profiles are important elements of the Usability training. 

Once implemented the Usability project will harmonize the use of models across planners from various geographies for the same business/product family.  There will be streamlined work flow.

We help you answer the following questions:

1.  Am I using a Pareto Approach in my APO planning process?

2.  How can I leverage APO DP to improve our forecast accuracy?

3.  Why does APO mostly give me flat forecasts? How do I fix this?

4.  What are Alpha, Beta, Gamma, Sigma and Theta? How do I leverage these parameters?

5.  What is the correct level to model so as to improve the overall accuracy at the SKU level?

6.  What are weighting profiles? How does it affect my final forecast?

7.  How can I control time trend using trend dampening profiles?

8.  Are there products and customers that are better left to APO’s automated modeling strategy?

9.  Which models to choose for what family of SKUs?

10.  What are custom modeling profiles?

11.  How is APO helping us simplify and improve the promotional planning process?

12.  How do I create Multiple Linear Regression Models in APO?

13.  Are we using the system defined error metrics in APO? Why are they different from the classic MAPE calculations?

14.  How do you conduct phase-in/phase-out of products?

15.  When should I not use the Croston’s Model?

16.  Why am I getting 9,000+ alerts every morning?

Perhaps the stress test of your new implementation or upgrade will be to ask the team if they can answer the above questions.

It seems like it is an easy thing to roll out new technology, but an uphill task to make it usable.  Did I hear the name Steve Jobs being mentioned somewhere………….

Follow us to learn more on the different service offerings at http://www.demandplanning.net.

Happy Forecasting!


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