Use VMI to Improve Forecasting

Use VMI to IMproVe ForecastIng By Larry Lapide, ph.D. (This is an ongoing column in The Journal, which is intended to give a brief view on a potential topic of interest to practitioners of business forecasting. Suggestions on topics that you would like to see covered should be sent via email to llapide@ mit.edu). Your Forecasting Health.” In it I talked about the fact that the history of VMI had been mixed because often customers, such as retailers, had been coercing their suppliers to manage their inventories for them for free, with little perceived gain to the suppliers. However, I maintained that when done well, VMI programs can improve intercompany supply chain operations because they help a supplier better coordinate product flow to customers. In this regard the benefits of VMI include ensuring that: • A manufacturing customer’s production operations are not disrupted by material shortages. I I ’ve always been a big believer thatusing downstream supply chain information can improve demand forecasting and planning. I’ve written several columns that discussed various aspects of this during my 12-year tenure in writing for the Journal of Business Forecasting (JBF). ...