Forecast accuracy index (FAI)
Forecast variations is a common topic of discussions between automotive customers and suppliers and fluctuations and inaccuracies are cumbersome to measure. Imagine a standardized tool to measure forecast variations that provides everyone with the same fair view of the situation. Odette Forecast Accuracy Index (FAI) makes this a reality!
FAI is a measurement developed by recommendations from the branch organization Odette. Meridion has built an application in the business intelligence tool QlikView based on these recommendations and this tool is free to use for members of Odette.
Two key figures are presented in the Odette recommendation (LG07):
- FAI – the percentage of forecast accuracy for a certain demand time bucket
- WTS – an index describing the imperfection of a forecast, i.e. if the forecast in general is above or below actual demand
The application includes among other things:
- Quick comparisons between different partners, addresses and/or items
- Overviews of forecast accuracy changes over time
- Analysis of what has caused bad forecasts
- Visualizations of delivery plans – see demand over time in graphs
Getting started with FAI is free for members of Odette. Read more and order at http://www.odette.se/it-tjanster/odette-fai-forecast-accuracy-analyzer
The application is built by Meridion together with Odette and we have the required knowledge and experience to implement it in your company. Implementing FAI is a quick process and we are of course happy to help you in a cost-efficient manner. Contact us today!
The following issues are common with forecasting information:
• Lack of information and transparency in the supply chain results in consequences such as “the Bullwhip effect” (https://en.wikipedia.org/wiki/Bullwhip_effect)
• The quality of the forecast information is low and there is no standardized KPI to support analysis and communication
• Global supply and long lead times exacerbate the problems as needs change with short advance planning
• Suppliers have to increase security stock or have overcapacity to pair for unexpected needs in demand
Improving the forecasting quality can positively affect a company from many perspectives, here illustrated by the so-called “3-CEP model”:
More and more companies roll-out Odette FAI.
Below is a selection of customers, which have installed the application. Please contact Meridion to discuss FAI directly with any of these companies:
- AB Volvo
- Volvo Cars
- AC Floby
- Heléns Rör
- Levi Peterson