Twitching - Cause & Cure
Thursday 24th May 2018
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The forecast alters yet sales have not.

This is horribly common, yet often unrecognised. There are several culprits (which I won't explore) and one entirely innocent reason.

Sometimes we don't think of a forecast as a forecast, yet it is.

A recommended Purchase Order (PO)[1]; a master production schedule; and using standard deviation to calculate safety stock all use a mathematical projection of the future.

That's a forecast.

Yet we may not think of it as a forecast. We may not even see the result. A large (and very successful) retailer recalculated then overwrote (and did not retain) the forecast every morning around 2am. Nobody saw it; no human judgment was applied to it.
When we plotted all those items whose target stock had changed while none had sold, the penny dropped.

Twitching has multiple causes and therefore multiple fixes. However, one common trap recurs.

If you think you have a forecasting problem, don't blithely pour more effort into forecasting. You'll probably make it worse!

In the mass of data, finding which sales have actually changed really is like looking for a needle in a haystack.
Just don't add more hay, which is what reforecasting below the 'Thresholds of Forecastability' (or TOF) does.

There's a wealth of further material available, including non-mathematical Tools to help set and understand the 'Three TOFs' (below which, you take increasing twitch risks). Just ask.

This might explain a lot. Please contact us

  1. The most pernicious twitching problem is the 'suggested PO for zero'. Since there's no such thing, let me expand! The system thinks we need none, because its forecast is currently lower than actual. If the forecast were higher than actual it would issue a daft PO quantity which somebody might catch. Because the system stays silent, nobody sees the problem until it's too late.
Trying to reduce stock often fails. Increasing Service Level usually reduces stock and increases profit. Go figure.
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