DEMAND FORECASTING
The Department of Defense has developed a Comprehensive Inventory Management Improvement Plan which lays out a course of action to improve inventory level setting processes, demand planning accuracy, and reduce forecast error. The implementation of this Department-wide plan, initiated in October 2010, will result in the following outcomes related to demand forecasting:
  • Reduction of on-order and on-hand excess of secondary inventory items
  • Identification of improved forecasting methods and inventory management techniques that consider an item’s life cycle
  • Implementation of standard metrics to set inventory levels
  • Improved and automated methods for collaboration and exchange of information
  • Approaches for improving setting inventory levels for low-demand items
    Investment risk reductions for new consumable items

DEPARTMENT-WIDE LIFE CYCLE FORECASTING ANALYSIS

Prior to developing the Plan, the Office of the Secretary of Defense (OSD) initiated a program to improve demand forecasting for secondary items throughout their lifecycles. Because improved forecasting should reduce inventory excesses and shortfalls and thereby provide for more effective and efficient materiel support, the program and this project subsequently became part of the overall improvement plan. The three primary lifecycle stages are: New item introduction, Sustainment and End of life.

The first phase of the life cycle to be analyzed, the Item Introduction or Provisioning phase was completed in November 2010.

This assessment had two objectives. The first was to use inventory stratification data to categorize items with excesses and shortfalls and quantify the role that demand forecasting plays in causing excesses and shortfalls. The second was to review the procedures the military services and the Defense Logistics Agency (DLA) use to forecast demand for new items being introduced into the DoD supply system. Click the image to view the Lifecycle Forecasting Causative Research and Item Introduction – November 2010

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