Inventory deployment & service

[jeb]

How does a company best capture demand information effectively to deploy inventory and determine inventory levels in various locations?

[Robbie]

That's the old trade off between sales information and true demand information. True demand information would have to be caught at customer service/order entry. That way you capture the orders that were cancelled, through lack of stock.

[Mood]

The trick is to capture the customers FIRST request and not a modified or negotiated one. That way you can always see what the customer actually wanted rather than what customer service persuaded them to accept. That first request is the one to base your demand plan on rather than what you actually supplied.

This is often a difficult concept for companies to grasp but it can lead to better forecasting i.e more accurate, and can require some clear training and instructions to customer service personnel, who often see substitutions as trying to help the customer. Sure you can substitute, but after you find out what the customer REALLY wanted. In systems like SAP I have seen them turn off aavailability checking at time of taking the initial order to drive the required behaviour.