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Demand & Supply Chain Management Evolution

13 Mar 2019
E2open Forecasting and Inventory Benchmark Study Finds Demand Sensing and Multi-Echelon Inventory Optimization Combination Reduces Safety Stock by More Than 30%


 E2open today announced the publication of its 2018 Forecasting and Inventory Benchmark Study, an in-depth analysis of the state of demand and inventory management that allows firms to compare their performance with that of industry peers and best-in-class companies. The most comprehensive of its kind, the study encompasses $250 billion in annual sales from leading global organizations in the food and beverage, household and personal care, industrial manufacturing, chemicals, and oil and gas industries.

Item proliferation, forecast accuracy and the value realized by investments in demand planning are some of the metrics explored by the study. New to this year’s study is a report of the inventory carried by manufacturers to meet customer demand.

In addition to assessing traditional demand planning, the study measures demand sensing technology’s ability to improve forecast performance and productivity. Demand sensing augments traditional demand planning systems by using real-time data, machine learning algorithms and automation to create forecasts aligned with current market conditions. The report also quantifies actual stock reductions achieved through the use of multi-echelon inventory optimization compared to traditional single-echelon inventory management. These findings provide a value reference for companies assessing either of these more advanced technologies.

“We are pleased to once again share industry insights and help companies in their pursuit of supply chain excellence,” said Michael Farlekas, president and CEO, E2open. “Manufacturers are looking to digital transformation and new technologies like machine learning and automation to tackle increasing supply chain complexity. This comprehensive study allows firms to benchmark their performance against peers and see how leading companies are using advanced technologies to improve forecasts, reduce inventory and ultimately increase shareholder value.”

The following are among the key findings reported in the 2018 E2open Forecast and Inventory Benchmark Study:

  • Item proliferation continues to be a challenge as it increases supply chain complexity at twice the rate of sales.
  • New product introductions and items in the “long tail” are especially difficult for traditional demand planning systems. Items in the tail incur two times the forecast error and account for three times the inventory per unit of sales compared to top movers.
  • Forecast accuracy rates for demand planning are essentially unchanged over the past five years, confirming that companies have squeezed nearly all the benefits they can from traditional demand planning systems.
  • Demand sensing technology more than doubles forecast value-added (a measure of the benefits realized by demand management investments) and consistently reduces forecast error by 36%. Demand sensing improves performance across the entire product portfolio, including top sellers, new products and items in the tail.
  • Multi-echelon inventory optimization technology decreases safety stock levels by 13% on its own and provides a reduction of 2.5 times more, or 31%, when used in conjunction with demand sensing.

“We are thrilled to have expanded the scope of the study to cover inventory performance and address a broader set of industries. We look forward to continuing to provide unique insights for both study participants and all interested companies,” said Robert Byrne, VP of supply chain solutions, E2open.

Free copies of the 2018 Forecasting and Inventory Benchmark Study are now available.




About E2open

At E2open, we’re creating a more connected, intelligent supply chain. It starts with sensing and responding to real-time demand, supply and delivery constraints. Bringing together data from customers, distribution channels, suppliers, contract manufacturers and logistics partners, our collaborative and agile supply chain platform enables companies to use data in real time, with artificial intelligence and machine learning to drive smarter decisions. All this complex information is delivered in a single view that encompasses your demand, supply and logistics ecosystems. E2open is changing everything. Demand. Supply. Delivered. Visit www.e2open.com.

E2open, the E2open logo and Harmony are registered trademarks of E2open, LLC. All other trademarks, registered trademarks and service marks are the property of their respective owners.






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