Introduction
Event Correction is designed to help companies recover from a significant disruption to normal sales and purchasing activity, such as that experienced due to the COVID-19 pandemic.
After such an event, as the company begins to trade normally again, the lingering impact of unusually low sales (or in some cases higher than usual sales) will continue to affect computer-generated forecasts. On top of that, suppliers may have been unable to offer their usual level of service for a period of time, with the resulting "poor" supply performance negatively impacting safety stocks.
Event Correction can improve your sales forecasts and safety stock levels by giving you the option to:
Specify which months of sales history were impacted and select a "normal" month to use instead for the purposes of forecasting
Specify which months of purchase history were impacted and elect to ignore orders receipted in those months when calculating lead times and safety stock
How to start using Event Correction
An Admin user can enable Event Correction by navigating to Settings > Configuration and selecting the History tab.
Follow these steps:
Enable the feature to view your historical monthly calendar
For any month where your sales were significantly impacted by the event, select an alternative month of sales history to use for forecasting. We generally recommend selecting the last good “normal” month of sales history. If you have a highly seasonal business, it may be better to select the corresponding month from the year before instead.
For any month where your supplier deliveries or lead times were significantly impacted, check the box to exclude orders you receipted in that month from the safety stock and lead time calculations
Click Update to save your settings
Lastly, regenerate your forecasts. To do this, go to System > Data Refresh, tick the option to “Recalculate all non-frozen forecasts” and then Reprocess Data. Keep in mind that all users will be locked out of the app for the duration of processing.
An example
Let’s look at how a forecast might change as a result of the settings shown above where the sales history from January 2011 is used to fill in for disrupted history during April, May and June 2011.
The dark blue line on the chart shows actual sales history. Note how sales in recent months are unusually low. The dotted blue line indicates how April, May and June are using history from January to help generate the forecast. On the right, the lower brown line indicates the original forecast based on actual sales history and the upper brown line shows the new stabilised forecast resulting from Event Correction.
In the app, you will be able to see the original sales history, adjusted history and adjusted forecast as shown. The original forecast was included here just for illustration purposes.
Frequently Asked Questions
What situations is Event Correction best used for?
Event Correction works best for businesses that experienced a reasonably consistent disruption across their product range for a few weeks or longer.
Can I use different settings for different groups of products?
Unfortunately not at this stage.
Why haven’t my forecasts changed?
Make sure you saved the changes to your settings. You’ll also need to reforecast as per step 5 above or wait until the first of next month for it to happen automatically.
Why can’t I find the settings?
You may need to be an Admin user to access the Settings / System menus.