Have you thought about sending your vendors Forecasts (830) instead of Purchase Orders (850)? Many mid-sized companies are now considering sending Forecasts so that vendors can plan better and offer lower prices.
A large set of savings for you comes from a better “organized” material management function. A sound Forecast requires more information and better trained/motivated material planners. Lastly, when interest rates rise, the cost of carrying inventory will as well. This creates a third set of savings.
While this may be a great option, you must not forget the most important part, sending the details accurately and timely so there are no disruptions. Preparing a reliable Forecast is a difficult task because product demand information is not reliable and varies frequently. But the secret is that it varies around a mean. Week-to-week fluctuations average out within a narrow range. After it is prepared, a smaller challenge is sending it.
To effectively implement Forecasts for production vendors require effective, reliable, and economical transmission of the Forecast as well as a feedback loop for confirmation. The P.O. Acknowledgement (855) is the “killer document” when integrated properly making your purchasing system highlight discrepancies. Requiring your vendors to return it within 24 hours also allows you much more time for second sourcing and less mistakes.
Fortunately, EDI is mature and supported by most vendors so the integration is straightforward, but not trivial. Implementing EDI is now more economical than you think because your existing EDI system can be used. DCS has the experience to extract, transfer, and load Forecast data to your EDI system for creation of a Forecast Release. This is the document vendors expect. It works for all vendors – large and small. For small vendors a connection to their EDI network (such as IBM, GXS, True Commerce, SPS Commerce or others) means that they pay for converting your EDI to a web form.
What experiences have you had with Forecasts? What benefits or disadvantages have you found?
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