Comparative Study of the Computer Tools Functions for Demand Forecast and Inventory Management

Introduction

This research study of demand forecast management
optimization and inventory management tools is a collaborative
effort between the Camilo José Cela University and EAE
Foundation.

Camilo José Cela University (UCJC) was created in
2000 as a projection of more than a century educational
experience of SEK School. Its objectives are to develop a quality
college education project where they could form "global
academics". That is to say, professionally prepared young people
with a comprehensive view of society and the XXI century"s
world.

The UCJC is a free, independent and modern university
with wide degree choices and adapted to society"s changing needs,
as the Bachelor of Science in European Transport and Logistics,
or the Master in Operations and Logistics, are official degrees
with its Advisory Council comprising of large national and
international companies and organizations, with relevance in
Logistics and Transport scope.

EAE Foundation is an organization dedicated to train in
business management scope, covering both general and specific
areas of business management, whose variety of programs are
offered through Business Management Institute (IGEMA). IGEMA-EAE
Foundation is a Camilo José Cela University"s
collaborating centre.

The IGEMA-EAE Foundation activity is aimed to train
managers, middle managers and technicians toward excellence in
its management as responsible for any area or business sector,
giving them, by quality training, tools that provide optimal
results in their work, attending the new excellence standards
demanded by the XXIth century organizations.

EAE Foundation, in its capacity as a non-profit
institution, promotes, develops and disseminates disclose
activities in order to generate and transfer new knowledge to
people in the organization and business
administration.

With the increasing importance of logistics in both
production and distribution sectors, and in order to promote
awareness to the subject as a source of strategic application
knowledge, the EAE Foundation conducts researches and promotes
the diffusion of knowledge in this area.

In this case, the Camilo José Cela University
Vice-chancellor of Research, in close collaboration with EAE
Foundation, has made the present study in order to find out which
has been the recent development in software tools of support for
demand forecasting and inventory management, as well as trying to
define future trends, identifying the users" needs.

The study direction was carried out by:

Dr. Adolfo Sánchez Burón – Research
Vice-Chancellor of UCJC.

Dr. Alfonso Cebrián Díaz – Research
Director of UCJC.

Dr. Oscar Coduras Martínez – Research and
Consulting Director of EAE Foundation.

Javier Marín Lacasta – Operations
and Logistics Professor EAE Foundation.

Study
objectives

The main research objective is to have a comparative
study of different computer applications in the demand
forecasting and inventory management scope, based on several
variables identified as key attributes of
applications.

For this purpose, the study presents an analysis from
the perspective of the application user, identifying both the
motivations for acquiring software with such features and the
uses to which it is intended, an evaluation of implementation and
satisfaction with the obtained results as well as the services
obtained from suppliers. The results of the acquired information
are presented on an overall evaluation for each of the variables
and a comparison of these variables among the leading suppliers
in the market.

As secondary objective, this research aims to increase
the sensitivity of the business about the importance of demand
forecasting and inventory management efficiency and
competitiveness of enterprises. To reach the customer with the
demanded product, in the exact amount and at the right time, is
the factor that may cause the company to achieve or not their
objectives. More than ever and for that reason a demand
forecasting and a very comprehensive inventory management is
needed.

Stock out, both in production and distribution, involves
the manufacturing rates delay or lost sales. In both cases it is
that, in such circumstances, companies maintain part of their
resources as idle, which directly affects your productivity and
profitability.

This study does not attempt criticism or underestimating
of any of the sector agents. On the contrary it, seeks to
encourage all the players, the users to perform and the providers
to advance, to work with and in some applications that, at the
present, are little more than necessary compared to more generic
s and less specialized systems and tools in this area than those
discussed in here.

Methodology

For the study development, a research methodology based
on the use of primary sources and quantitative research
techniques has been used. To gather information for the users"
side, a questionnaire was designed to provide the evaluation of
the items object of interest for the research. As techniques, for
the fieldwork development, the telephone interview or email were
identified as the most appropriate, given that the interviewees
profiles were assumed difficult to locate and would have
difficulties answering a questionnaire that required to spend
some time, including that some of the information requested was
likely not to be in the respondent memory and the answer should
be looked causing postponing their response.

The considered universe has been the software tools for
demand forecasting and inventory management users located in
Spain, having been identified as providers of software the
following:

Oracle (Demantra); Microsoft (Demand Planner);
Logility, previously Demand Solutions (DS One); Infor (Demand
Planning); ToolsGroup (Service Optimizer 99+, antes DPM);
Slimstock (Slim4); TXT (Perform 2008); JDA, previously i2 y
Manugistics (i2 / Strategic Supply & Demand Management)
providers; SAP (APO); Infor, previously Finmatica (MerciaLincs);
Barloworld (Optimiza) y Logility (Voyager).

The users located in Spain listed by the several
providers in their web pages were, initially, taken as accessible
population. They are concreted as:

Oracle (Demantra): 6 user references
estimated.

Microsoft (Demand Planner): 5 user references
estimated.

Toolsgroup (Service Optimizer 99+): 52 user
references estimated.

Slimstock (Slim4): 43 user references
estimated.

TXT (Perform 2008): 13 user references
estimated.

JDA (i2 / Strategic Supply & Demand
Management): 10 user references estimated.

SAP (APO): 11 user references
estimated.

This totals 140 user references estimated.

Initially, a sample was not quantified because it was
considered to try to contact all of them. So, the sample would be
configured by users willing to respond the questionnaire which,
once the fieldwork done, changed the initial configuration
forecasts sample, by identifying new users.

Another of the circumstances that
influenced the sample configuration was that some
of the companies providing the software object of
study were closed and others absorbed by
competitors.

Finally, the sample was configured as
follows:

• 19 users of Service Optimizer 99+ by
  Toolsgroup.

• 17 users of Slim4 by Slimstock.

• 8 users of APO by SAP.

• 11 users from other applications where we find: 2
  users of Perform 2008 by TXT, 1 of i2 by JDA, 1 of Strategic
  Supply & Demand Management by JDA and 7 users of custom
  applications for several software suppliers.

This represents a total of 55 sampling units, having
polled the 39.3% of the accessible population.

The sample users belong to a large variety of business
sectors, both manufacturers and distributors, and in terms of
size, both SMEs as large companies.

According to the final features of the sample, the
comparative results are shown for ToolsGroup, Slimstock, SAP and
Others providers, included in the last group all the other
providers due to shortage of sample units that prevent to compare
their results with minimal reliability.

The questionnaire used for the study consists of 31
questions divided into two main sections: General Variables
Valuation Software (21 issues) and Efficacy, Satisfaction and
Trends Variables (10 issues). For this conclusions summary, the
conclusions of the 10 aspects considered the most relevant
operating results and analysis set have been selected. 6
conclusions belong to the first block and 4 belong to the second
one.

In addition to this synthesis, there are two other
documents: the full report and an executive summary, which can be
consulted and downloaded at the following link in pdf:

www.igema.net/docs_igema/igemr/estudio/informe.html

The conclusions obtained from the evaluations collected
from the respondents are presented bellow.

Conclusions

The scenario faced by any manufacturer or distributor
today is the saturated markets where the consumer has many
options to choose from. The coexistence between the development
of information society and the markets globalization has had a
decisive impact on the growth of consumers" demand and,
consequently, of all who contribute to provide it.

One of the biggest challenges that companies face today
is to provide efficiency under adverse conditions: products from
anywhere in the world are demanded due to the transparency that
Internet has brought to all markets knowledge, the stocks are
increasingly diversified, the products cycles are becoming
shorter due to consumers" hunger for innovation and the huge
competition forces producers and distributors to continuous
promotional activities.

All attempts to capture and retain a consumer whose
demands grow in inverse proportion to his patience to get the
product they need or desire. In this scenario, no company can
afford to under-utilize their assets at risk of losing
competitiveness.

That is why information and communication technology
(ICT) is an essential part of that asset. A technology that, if
it is suitable to face the challenges mentioned, helps the
company, notoriously, to win the efficiency battle which, in the
supply chain scope translates into software tools able to manage
the demand planning and inventory optimization
processes.

However, ICTs have highly evolved in a short time. They
have had to adapt to the reality of demands in its market
resulting from the pressure of the scenario described. There is
no demand for large and complex systems nowadays. Companies
require simple software, with brief implantation, and little or
no complex computing if possible, so it can be handled by anyone
with minimal training, being able to organize and standardize the
planning and provisioning processes, unifying management of all
company agents involved in this process.

Nowadays, investing in software for demand forecasting
and inventory management is, besides to acquire a central element
to increase stock rotation and the service rate offered to the
customer, to cover a traditional ERP deficiency, having been
proven these specialized applications utility by an increasing
demand.

Regardless of the registered differences between these
applications providers, perhaps the most interesting note in this
study has been the success of these tools between its users and
their great contribution to optimizing the company management, a
success demonstrated by the absence of noticeable dissatisfaction
among most of the respondents.

The conclusions presented bellow involve the analysis
results synthesis that were carried out on the market for this
kind of software and their suppliers in Spain, viewed from the
users" perspective, referred to therein the comparative between
them on the various issues discussed.

Section 1.
Software overall evaluation results

About the selection and software use

Suppliers of software tools for demand forecasting and
inventory management evaluated in this study have experience in
the sector given the high number of deployments, made mostly from
2003. The Slimstock group highlights for registering a sustained
growth trend, being the last few years where the largest
implementations of all groups have been reported.

The most commonly areas where these tools applications
are used are those of "Logistics" (72.2%) and "Purchasing and
supply" (70.9%). According to the respondent answers, the purpose
these applications are more commonly used for, overall, are
"Logistical supply forecast" (74.5%) and "Supply management"
(70.9%). Slimstock registered values of 100% in "Purchasing and
supply" and 100% in "Supply management" areas, so it can be
inferred that this provider is a specialist in these company
areas.

About software acquisition costs

The obtained responses regarding these tools acquiring
cost are not homogeneous and diverge depending on the supplier.
Slimstock prices highlights and seem to be the most competitive
by far, inasmuch as the highest percentage of responses from its
users (87.5%) is below 100,000 euros. ToolsGroup users
agglutinate the largest percentage of respondents (66.7%) in the
more than 100,000 Euros range. The SAP and Other groups obtained
more scattered answers, even though they both place their highest
percentages above 150,000 Euros, 83.3% and 68.8%
respectively.

The main cause of deviation from the initial cost by
those who had indicated overspending was "Difficulties during the
implementation process" (about a third of registered deviations).
This cause is present in greater or lesser intensity in all user
respondent groups except Slimstock provider, whose only cause
identified was: "Having acquired more software, more licenses or
more services."

About the software implementation
duration

In general, the application implementation and the
users" training time varies from one to other group, being
Slimstock the provider that registered the shortest time in every
aspect. To implement, 88.2% of users from Slimstock surveyed said
they needed 3 months or less. For the users" training, 100% of
respondents said they needed 1 to 2 weeks, and 70.6% needed two
or less days to train the administrator. In the other groups
these response vary getting answers of even 24 months in SAP and
ToolsGroup implementations cases, 14 weeks to train ToolsGroup
users, and even reaching 30 days for administrator training in
Other suppliers case. So it can be deduced that Slimstock
software is the easiest application to deploy and manage and,
therefore, to train new users.

About the implementation and consulting services
evaluation

In general, "Experience level" evaluation of the
providers consulting team can be considered satisfactory due to
an average of 7.63 out of 10. Slimstock provider is the best
valued for its users group regards the "Experience level" with an
average of 8.87 (+1.24 respect to global average), having been
rated with 7 or more for all respondents who had it as a
supplier. SAP is the second highest-rated with an average of
8.13, while providers as ToolsGroup (with 27.8%) and Other (with
30%), registered significant percentages of respondents whose
valued this aspect with scores at or below 5.

Regarding to the "Consulting team involvement level",
the general evaluation is high too due to the record average of
7.87 out of 10. Slimstock is also the highest rated provider in
this area with an average of 8.69 (+0.82 respect to global
average), due to the significant 93.7% of respondents assessed
with scores equal to or greater than 7. SAP is the second group
with an average of 8.50. All other providers received some scores
below 5.

As for the "Consulting team availability level", the
overall average shows, that this aspect evaluation is good: 7.73.
SAP is the highest rated provider with an average of 8.63 (+0.9
respect to global average) and Slimstock is the second best rated
with an average of 8.31 (+0,58 respect to global average).
ToolsGroup and Other collectives obtained ratings below
average.

About the maintenance service cost

According to its users, The Slimstock collective
registered the lowest percentage of annual maintenance cost (15%
about the license cost). This percentage was indicated by most of
its users (84.6%), reason why it can be claimed to be the
provider that offers the best value cost for this service. 40% of
the ToolsGroup users" respondents indicated that 20% is the
maintenance percentage (note that this group registered widely
dispersed answers ranging between 30% and 100% of the licenses
price as maintenance service cost). Regarding to SAP and Others
providers, the answers are scattered, a SAP user said it was 20%,
another one said it did not apply any percentage, and respondents
who had Other suppliers indicated that the percentage applied was
an 8%, another said it was 15% and another it was 20%.

About the after-sales services
valuation

The respondents assessed with more than 7 points global
average the following aspects: "Knowledge and experience on
the subject and sector level" (7.58 on average),
"Provider effectiveness in resolving technical queries"
(7.56 on average) and "Supplier quickness" (7.35 on
average), so it can be concluded that, overall, users are
satisfied with these evaluated services. This emphasizes that the
responses from Slimstock collective were not registered below 5
(dissatisfied), being the highest rated provider in all aspects
and exceeding the global average in each case.

After the services quality evaluation provided by the
supplier, the following received global average evaluations above
7, in descending value order are: "After Sales" (7.59
respect global average), "Reinstalls" (7.24 respect
global average) and "Bug fixing" (7.17 respect global
average). The services that received a global average below 7
are: "New Versions" and "Follow-up
Visits/Audit" service, with global average values of 6.93
and 6.90 respectively, indicating that even when evaluated as
good, can be improved significantly. The Slimstock collective is
the best valued by its users in most of the services compared to
other suppliers surpassing the global average in every aspect
except in the "Follow-up Visits / Audit" service, where SAP holds
the first place in the comparative. Should be noted that the
Slimstock group is valued in "New Versions" by its users
far above the global average with significant difference (+1.33
respect global average), showing that the supplier is very active
to make software improvements.

Section 2.
Efficacy and Satisfaction variables Results

About the software effectiveness

By questioning the users surveyed about the extent on
business objectives the software use has enabled to reach, they
all achieve nearly 60% on objectives improvement regarding the
management preceding the software incorporation, so it can be
said it is more than acceptable. The Slimstock provider received
top ratings compared with the other suppliers evaluated,
exceeding the global average in each case. In SAP case, the
results show similar averages to the global one. The ToolsGroup
collective obtained valuations below the global average in the
business goals evaluated. The Other suppliers respondent users
answered different results in each case: "Stock
optimization" (7 percentage points below the average),
"The stock availability Improvement for service" (7
percentage points above the average). Worth noting that in the
"Increase the benefit of the company" goal, very
different responses were registered according to the supplier.
Slimstock obtained more than 20 points over the average, while
ToolsGroup obtained 17 points below average, SAP very similar to
the average and the Other suppliers group, 15 points below
average.

The global average for the following evaluated aspects
surpasses the score of 7 out of 10: "Integration with
ERP" (7.02), "Application functionality set" (7.56)
and the "Its work efficiency application impact "(7.60),
so they are considered satisfactory. The "Ease of use"
aspect (6.91) obtains a lower global average. Slimstock provider
is the best rated in every aspect surpassing the global average
in each case, remarking the average score achieved on the impact
of its application in "Labour efficiency":
8.56.

About users" satisfaction with the
software

The global average in overall satisfaction with the
software is 7.72 out of 10, while the global average in the
software quality-price relation is 6.79 out of 10, average that
registers a good but improvable rating. Slimstock provider is the
best valuated in both overall satisfaction with the software
(8.50) and quality-price relation (7.69), almost a point above
the global average in both cases. SAP users are the second that
best valued overall satisfaction with the software and its
quality-price relation with scores slightly above of the global
average, meanwhile the ToolsGroup ones valued slightly below the
global average, and the Other providers users have been valuated
with the lowest score in general satisfaction and its
quality-price relation.

About if users would recommend other
companies the software

When users were asked whether they would recommend other
companies for their application, most of them (88.7%) answered
they would. In general, the percentages are convincing enough to
validate the usefulness these tools bring to the company. When
analyzed by collectives, Slimstock supplier was the users" group
with the highest percentage of Yes (94.1%). ToolsGroup provider
obtained the second highest percentage (88.9%) followed by SAP
group (87.5%). Finally, Other providers obtained the lower
percentage of recommendation (80%).

About whether the user would give the application
back to their provider if the amount of the investment would be
refund

Finally, when respondents were asked whether they would
return the application to the supplier in exchange for the
returns of the amount invested, only 9.6% responded that they
would. As in the previous case, the refusal of almost all users
to returns the applications to its provider, demonstrates its
indispensability in the current company. Among the groups
evaluated, ToolsGroup and Slimstock users are less willing to
return the application; most of them replied they would not
return the application, 94.4% and 94.1%, respectively. For Other
providers, 88.9% of users responded that it would NOT return the
application in case of refund. SAP users are the ones who
provided the highest percentage of affirmative responses, with
25%.

As an overall conclusion of the study, according to
the results and hoping to be able to encourage its use, a more
than positive assessment of the usefulness of computer
applications for demand forecasting and inventory management
existing today in the market can be drawn.

Autor:

IGEMA-Fundación
EAE