Quality of Forecasts as the Factor Determining the Coordination of Logistics Processes by Logistic Operator
Abstract
:1. Introduction
- Question 1: What features must a logistic operator have to create forecasts that will be useful for other links in the distribution network?
- Question 2: How does the characteristics of the products within the distribution network affect the quality of the forecasts made by a logistics operator?
- Question 3: How do the elements of the distribution network configuration affect the quality of forecasts made by a logistics operator?
2. Theoretical Background
2.1. The Distribution Network as a Particularly Complex System
2.2. Factors Influencing the Quality of Forecasts for Inventory Management in Distribution Networks
2.3. Logistics Operator in the Distribution Network
3. Research Methodology
- Distribution network configuration
- Characteristics of products within the network
- Central link features
Algorithm 1: Tool script running in the example of part with ETS calculation |
1: try({ 2: dd.ETS <- ets(learn[,k]) #using ets() to learn set for the chosen SKU 3: dd.ETS.f <- forecast(dd.ETS, h=horizon_length) #forecast calculation based on training set in the chosen horizon 4: acc_ETS <- accuracy(dd.ETS.f[,k]) #accuracy calculation 5: MAPE_train.ETS <- acc_ETS[1,4] #checking the MAPE value for training set 6: MAPE_test.ETS <- acc_ETS[2,4] #checking the MAPE value for test set 7: col.n.ETS <- colnames(learn)[k] 8: model.ETS <- “ETS” 9: cbindETS <- cbind(print(col.n.ETS),print(dd.ETS.f),print(MAPE_train.ETS), print(MAPE_test.ETS), model.ETS) 10: c(“SKU”,“Forecast”,“Lo80”,“Hi80”,“Lo95”,“Hi95”,“MAPE.Train”,“MAPE.Test”,“Model”) }, silent = T) |
- The main limitations of the proposed model are:
- High dependency on input data—which can be solved by implementing the correct information exchange system.
- Relying only on quantitative data—which can be solved by training 3PL staff in the area of forecasting and using the results of the XYZ analysis to find better forecasting methods for the Z group.
- A prediction model embedded locally which can cause problems with computing power—this can be solved by moving the computing infrastructure to the cloud.
- The fact that forecasts are now based on distorted data related to poor perception and description of certain time series—which can be solved by improving cooperation in the distribution network and developing better information exchange systems.
4. Results and Discussion
5. Conclusions
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
Abbreviations
3PL | Third-party logistics |
ABC/XYZ | Inventory classification method by ABC/XYZ |
ATO | Assembly-to-order |
BPMN 2.0 | Business Process Modeling and Notation 2.0 |
CDP | Customers orders decoupling point |
CPFR | Collaborative Planning Forecasting and Replenishment |
DN | Distribution network |
ETO | Engineering-to-order |
IDP | Information decoupling point |
IT | Information technology |
MAE | Mean Absolute Error |
MAPE | Mean Absolute Percentage Error |
MSE | Mean Square Error |
MTO | Make-to-order |
MTS | Make-to-stock |
POS | Point of sales |
R | R programming language |
RMSE | Root Mean Square Error |
SKU | Stock keeping unit |
TSL | Transport-forwarding-logistics |
WMS | Warehouse management system |
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Basic Roles in the Distribution Network Taking into Account the Degree of Their Implementation | |||
---|---|---|---|
Low Degree | Medium Degree | High Degree | |
Logistic operator | Distribution network integration, Selection of business partners in the distribution network, the ability to direct the activities of other network participants | Network monitoring, network creation (the ability to freely shape the network structure), selection of logistic partners, maintaining the consistency of the network structure, network reconfiguration, assigning tasks to network partners according to competences, creating identity and organizational culture, a significant number of processes implemented in the stream of added value | Coordination of logistics processes in the distribution network, a significant position in the network in terms of leadership and intermediation, the ability to cooperate with production companies, a significant share in the logistics services market, a significant number of market segments served, geographic coverage, width of service areas, access to logistics infrastructure |
Function | Brief Function Description |
---|---|
ses() | Forecasting stationary time series connected with simple exponential smoothing methods. |
holt() | Forecasting time series with trend using Holt Method |
holtWinters() | Forecasting time series with trend and seasonality using Holt-Winters Method. In default version function HoltWinters() is using two additive seasonality versions. To use multiplicative version of the method it is necessary to modify the function as follows: HoltWinters(x, seasonal = c(“multiplicative”), where x is the time series. |
ets() | Forecasting based on three dimensions: error (E), trend (T) and seasonality (S). Function gives a chance to determine mentioned parameters. In all cases: N—none, A—additive, M—multiplicative and Z—automatically selected. In default function configuration, all parameters are automatically selected and default function is equivalent to ets(x, model = “ZZZ”), where x is the time series. |
ar() | Forecasting based on fitting the time series autoregression model to the input data. |
arima() | Forecasting based on fitting ARIMA(p,q,d) model to time series. Focus on connection between autoregression process (AR(p)) to moving average process (MA(q)). |
auto.arima() | Forecasting based on ARIMA(p,q,d) model, but additionally taking into account information criteria as AIC (Akaike Information Criterion), AICc(Corrected Akaike Information Criterion) and BIC(Bayesian Information Criterion). |
arfima() | Forecasting based on autoregressive fractionally integrated moving average model (ARFIMA(p,d,q)) with two-steps procedure where parameters p, d and q are determined separately. Parameters of autoregression (p) and moving average (q) are determined by Hyndman-Khandakara algorithm. Integration level (d) is determined by Haslett and Raftery algorithm. |
tbats() | Forecasting based on exponential smoothing with Box-Cox transformation (tb), ARMA errors (a) and components of: trend (t) and seasonal (s). |
splinef() | Forecasting based on cubic smoothing splines equivalent of ARIMA(0,2,2) model but with some parameters restriction. |
stlf() | Forecasting based on time series decomposition using local regression. Function uses Seasonal Decomposition of Time Series by LOESS (developed by Helsel and Hirsch in 1997). |
meanf() | Forecasting based on assumption that random component is independent and identically distributed to whole time series. |
rwf() | Forecasting based on random walk with drift model. |
snaive() | Forecasting based on the middle of the range which contains most observations. It references to one of the direct modal estimator called Chernoff’s estimator. |
nnetar() | Forecasting based on neural network (neural network time series forecasting). In default settings function forecasting demand based on simple, feedforwarded neural network with one hidden layer. |
Selected Attributes | Attribute Type * | Whether the Logistic Operator has an Equal Attribute? |
---|---|---|
Ability to configure a distribution network | Necessary. | yes |
Good specificity of relationships with enterprises in the network and experience in developing cooperation. | Additional. | partially |
Good relationships with links in the network. | Necessary. | yes |
Cooperation establishing skills. | Additional. | yes |
The ability to manage the marketing and sales facilities. | Additional. | no |
The ability to select a demand management strategy for a given distribution network. | Necessary. | yes |
Supply chain coordination skills. | Additional. | no |
The ability to improve processes in the distribution network. | Additional. | yes |
Having an IT system to exchange information across the entire network. | Additional. | no |
Ability to make improvements in information flows and to implement EDI. | Necessary. | yes |
Appropriate location in the distribution network. | Additional. | yes |
Significant position in the market compared to other operators. | Additional. | no |
Ability to influence the actions of other nodes. | Necessary. | yes |
A wide spectrum of services offered in various fields. Operational knowledge of all company-specific processes. | Additional. | no |
Comprehensive services (offering additional services related to logistic flows) | Necessary. | yes |
Analytical knowledge and the ability to manage large data sets. | Necessary. | yes |
Having a well-constructed and selected forecasting algorithm. | Additional. | currently being created |
Distribution Network | Number of SKU * | Number of Assortment Groups | Number of SKU ** | Direct Distribution from Logistic Operator | POS Number in Total | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Intermediaries | POS *** | Wholesalers | ||||||||||
A | B | C | Q | % | Q | % | Q | % | ||||
DN.1 | 1362 | 19 | 282 | 302 | 778 | 322 | 78.39 | 185 | 21.61 | 0 | 0 | 14,870 |
DN.2 | 1152 | 15 | 171 | 219 | 762 | 132 | 25.15 | 1152 | 55.78 | 231 | 19 | 18,495 |
DN.3 | 415 | 12 | 72 | 95 | 248 | 111 | 2.68 | 2110 | 97.18 | 8 | 0.14 | 2660 |
DN.4 | 60 | 5 | 13 | 15 | 32 | 25 | 98.95 | 15 | 1.65 | 0 | 0 | 3247 |
DN.5 | 272 | 8 | 11 | 30 | 231 | 168 | 100 | 0 | 0 | 0 | 0 | 8180 |
Evaluated Element | Weight | Distribution Network | |||||
---|---|---|---|---|---|---|---|
DN.1 | DN.2 | DN.3 | DN.4 | DN.5 | |||
Relationship of manufacturer with logistic operator | Information exchange on the changes in production and stock references identification | 0.2 | 1 | 2 | 1 | 2 | 2 |
Information exchange on sales peaks | 0.2 | 1 | 1 | 1 | 2 | 2 | |
Sending cumulative forecasts | 0.1 | 3 | 2 | 0 | 2 | 3 | |
Often direct contact | 0.1 | 2 | 3 | 1 | 3 | 3 | |
Seldom assortment changes | 0.15 | 1 | 1 | 2 | 3 | 3 | |
Inclusion of the operator into information exchange | 0.25 | 1 | 1 | 0 | 2 | 3 | |
final result—relationship of operator with manufacturer | 1.3 | 1.5 | 0.8 | 2.25 | 2.6 | ||
Results of distribution network configuration | Information distribution | 0.2 | 3 | 2 | 1 | 2 | 3 |
Low safety buffers | 0.1 | 2 | 2 | 2 | 2 | 2 | |
Low dependence of manufacturer on clients | 0.15 | 0 | 3 | 1 | 2 | 3 | |
Information exchange on sales peaks within the whole network | 0.25 | 1 | 2 | 0 | 1 | 3 | |
Satisfactory productiveness | 0.15 | 3 | 2 | 1 | 2 | 3 | |
Frequency of orders update | 0.15 | 1 | 3 | 1 | 3 | 2 | |
final result—network configuration | 1.65 | 2.3 | 0.85 | 1.9 | 2.75 | ||
Characteristics of products within the network | High warehouse susceptibility | 0.2 | 2 | 2 | 3 | 2 | 2 |
High transport susceptibility | 0.2 | 2 | 2 | 0 | 3 | 3 | |
AX share—result | 0.3 | 0 | 2 | 1 | 1 | 3 | |
Release variability level | 0.3 | 1 | 2 | 0 | 1 | 3 | |
final result—characteristics of products within networks | 1.3 | 2 | 0.9 | 1.6 | 2.8 | ||
Total result | 4.25 | 5.8 | 2.55 | 5.75 | 8.15 |
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Kramarz, M.; Kmiecik, M. Quality of Forecasts as the Factor Determining the Coordination of Logistics Processes by Logistic Operator. Sustainability 2022, 14, 1013. https://doi.org/10.3390/su14021013
Kramarz M, Kmiecik M. Quality of Forecasts as the Factor Determining the Coordination of Logistics Processes by Logistic Operator. Sustainability. 2022; 14(2):1013. https://doi.org/10.3390/su14021013
Chicago/Turabian StyleKramarz, Marzena, and Mariusz Kmiecik. 2022. "Quality of Forecasts as the Factor Determining the Coordination of Logistics Processes by Logistic Operator" Sustainability 14, no. 2: 1013. https://doi.org/10.3390/su14021013
APA StyleKramarz, M., & Kmiecik, M. (2022). Quality of Forecasts as the Factor Determining the Coordination of Logistics Processes by Logistic Operator. Sustainability, 14(2), 1013. https://doi.org/10.3390/su14021013