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Archive for the ‘Forecasting’ Category

Automakers are just different. Given their size, just what they do matters to people ranging from suppliers to policy makers. Thus it is news when a company like General Motors decides to be a little less transparent about just what it is doing (GM goes dark on output stats, causes stir, Automotive News, Jun 17).

For decades, GM and nearly all other major automakers have reported the number of cars and trucks produced at their North American plants each month, broken out by nameplate. The data get folded into numerous economic indicators, including ones published by the Federal Reserve, and are a benchmark for industry insiders to forecast GM’s future production.

But this month GM notified several research providers that publish production data — including IHS Automotive, the Automotive News Data Center and Autodata Corp. — that it will no longer give them those figures, providing instead only the number of wholesale deliveries.

Things brings up two questions. First, who was using this data? Second, just why is GM reporting wholesale deliveries instead? (more…)

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We have already written in the past about the use of data analytics to best route customers to agents based on demographics and other characteristics.  The NY Times has an interesting article on the use of data analytics to improve retention and employee-employer relationships (“Big Data, Trying to Build Better Workers“)

The article discusses the broader appeal of these ideas, but focuses on applications to call centers. Why call centers? In contact centers, customer service agents, that are hourly workers handle a steady stream of calls under challenging conditions, yet their communication skills and learning capabilities play a crucial role in determining both the employee’s tenure and performance. The article discusses a new startup, Evolv, which helps firms find better-matched employees by using predictive analytics.

Transcom, a global operator of customer-service call centers, conducted a pilot project in the second half of 2012, using Evolv’s data analysis technology. To look for a trait like honesty, candidates might be asked how comfortable they are working on a personal computer and whether they know simple keyboard shortcuts for a cut-and-paste task. If they answer yes, the applicants will later be asked to perform that task.

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Forbes had an interesting article, asking its readers whether they are ready for the social supply chain (“Are You Ready for the Social Supply Chain?”).  It seems that the author and I don’t really know what is a social supply chain, but the article brings several interesting points

 A recent report by  Buddy Media and Booz & Company identified Facebook (with 850 million users, it shouldn’t surprise anyone that 94% of respondents regard it #1), Twitter(77%) and YouTube (42%) as  the top three preferred social media platforms for brands to utilize. This information does not mean that the functionality of other social media platforms, including blogs, and enterprise systems like Moxie Software and Yammer are not valuable to enhance external communication and collaboration. “

Yammer improves communication within the organization by creating internal social networks for enterprise purposes, allowing employees to communicate among themselves. Clearly improving communication within the organization is a lofty goal, but is a social network the way to do it? I have seen firms in which employees were sitting in adjacent offices, and did not even share a common forecast, not to mention that none of them knew what inventory policy was the other person using. Is the only goal of this “social supply chain” to create a vehicle for communication among the different nodes in the chain?

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My office sits in Nathaniel Leverone Hall. I never gave any thought to who Mr. Leverone was until on a visit to my parents in upstate New Hampshire I drove past Dartmouth’s Leverone Field House. That got me wondering who the guy was. It turns out that Mr. Leverone was from New Hampshire and went to Dartmouth but made his fortune in Chicago. He was a vending machine magnate.

I got to thinking about Mr. Leverone again because of a Wall Street Journal article on the technological evolution of vending machines (Restocking the Snack Machine, Aug 3). Companies who sell through vending machines, like almost everyone else, has been under pressure of late. Margins are thin and a number of typical sales points (factories and offices) have closed.

The response, at least among those that own a large number of machines, has been to go high tech. Imagine, essentially, an Internet enabled Coke machine that tells its owner what has been selling.

“It’s only natural that, when times get tough, people search for new and better ways to do things and take risks on doing things they might not have done when times were going well,” says John Mitchell Jr., an owner of Treat America Ltd. of Merriam, Kan., which has about 12,000 vending machines in the Midwest.

Treat America’s drivers used to stock machines with the most popular foods in their regions, based on sales tracked manually by category rather than individual items. It was difficult to know how different products were selling in particular machines.

Since January, Mr. Mitchell has outfitted about 40% of his machines with systems that record and transmit real-time sales data in each of a machine’s 45 slots. Mr. Mitchell says he now knows that about 40% of the slots are what he calls “dead spirals,” dispensing less than one item per week.

While packs of Cheez-It crackers sell the most of any item in a vending machine in a Kansas City, Mo., call center, they don’t even reach the top 10 in a hospital three miles away.

“You’re catering to a population that might be as small as 30 or 40 people,” Mr. Mitchell says. “The unique preferences of that population can drive sales significantly.”

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Winter has finally come to Chicagoland. Temperatures have dropped and we have had our first measurable snowfall.  This has also led to some articles on local municipalities buying road salt (Road departments prepare for winter, Daily Chronicle, Nov 30 & Indiana road salt supplies up, cost down for 2009, Chicago Tribune, Dec 5).  It turns out that managing a towns inventory of road salt is a tricky business.  The Farmer’s Almanac can take a guess, but no one knows just how bad the coming winter will be.  To make matters worse, the need for road salt depends on more than just the total volume of snow. As the head of the DeKalb county highway department explains:

“We use the same amount of salt on one 10-inch (snowfall) as one 2-inch (snowfall),” he said. “If we get ice, that’s worse. The only way to fight ice is with chemicals.”

On top of that, the prices move more than you would expect.  Many towns are paying prices in the ballpark of $50 – $60 per ton this year.  Two years ago prices were below $50 a ton.  Last year prices we well over $100 per ton.  (Why? Lots of reasons starting with high transportation costs and flooded salt mines.)  As a consequence both Illinois and Indiana organize purchasing groups at the state level to get better prices before the season starts.  Getting more salt during the season may be possible but is not guaranteed.

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The current economic climate makes life hard for retailers. The economy seems to be stabilizing but what will happen for the holiday season? Will consumer spending bounce back or will sales be slow? For many retailers, now is too late for adjusting their plans. Long lead times force them to place their bets for Christmas early in the summer. An article in today’s Chicago Tribune (Retailers continue defensive inventory strategy) suggests that many retailers playing it conservatively. As the article explains:

The amount of cargo coming into the U.S. — a proxy for retail inventory — is at its lowest level in at least seven years, according to a report last month from the National Retail Federation and IHS Global Insight. Import cargo volume at the nation’s major retail container ports is forecast to fall 19 percent in 2009 from last year.

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