Structure of an exponential smoothing method for a convenience store
Introduction
Self-service stores in the world have gained greater relevance and market share, their sales have increased as a result of more customers visiting them. Perhaps the secret is that in one place there is a greater variety of products at very competitive prices. Another variable that makes these stores popular is that customers currently have the possibility of paying for water, electricity, telephone, etc.
The company 7/24 had its beginnings in 2004, and in 10 years it has managed to position itself as one of the main commercial chains in the Córdoba-Orizaba region.
After interviewing some clients and workers of “7/24”, a shortage in a group of items was identified as a problem, causing certain deficiencies in the service provided.
Next, certain strategies other than those proposed in the project title will be presented, based on a study of different techniques in order to define the best one and carry it out.
Theoretical framework
Forecasts
In business, economic and political spheres, prediction and forecasting have different meanings. Forecasting is a process of estimating the occurrence of uncertain future events by projecting past data into the future. Prediction is a process of estimating a future event based on subjective considerations. (Heizer & Render, 2009) The interest is mainly in demand forecasts, but companies also forecast raw material prices, labor costs, interest rates and income. Good forecasts enable managers to plan for appropriate levels of personnel, raw materials, capital, inventories, and a host of other variables.
This planning results in better use of capacity and improved employee relations and customer service. In general, when speaking of forecasts, it usually refers to some combination of forecast and prediction, therefore, forecasts can be classified into:
- Qualitative or intuitive methods Quantitative methods.
Qualitative Methods
Qualitative prediction procedures include subjective estimates and are mainly used when data is scarce, contradictory, expensive, irrelevant or not available; for example, when a product is introduced for the first time on the market. Intuition, personal experiences, and the value system are used to convert qualitative information into quantitative estimates. The techniques that can be used are:
Consultation with the sales force
In this approach, each salesperson estimates what sales will be in their region, which are combined at the district and national level to arrive at a global forecast. (Joseph)
The Delphi technique
It is a systematic method, organized to obtain a consensus of an expert opinion, respecting the anonymity of its members and avoiding many of the disadvantages of the executive opinion approach. Some of the undesirable characteristics of group or mite discussions can be avoided with the use of questionnaires. In Delphi's approach, direct discussion is replaced by a carefully designed program of sequential questions, usually asked through questionnaires, with feedback controlled by a coordinator. (Hamid, 1999)
Market research
It consists of a systematic approach to determine the degree of consumer interest in a product or service, through the creation and testing of various hypotheses through surveys aimed at collecting data. This approach is great for short-term forecasts only.
Moving Averages
The rolling forecast method is used when you want to give more importance to more recent data sets to obtain the forecast.
Each point of a moving average of a time series is the arithmetic mean of a number of consecutive points of the series, where the number of points is chosen in such a way that seasonal and / or irregular effects are eliminated.
When to use a moving average forecast?
The moving average forecast is optimal for random or level demand patterns where the impact of historical irregularities is intended to be eliminated by focusing on periods of recent demand. (Lopez)
When to use a moving average forecast?
Formula
Formula
Average sales in units in period t
Summation of data
Actual sales in units from periods prior to t
Number of data.
Work motivation
It is one of the fundamental tasks of the human resources management department of any company and consists of the set of stimuli that the worker receives that guide them to act in a certain way in the workplace. (Alcaraz, 2003)
- The money. Getting it is the main reason anyone works. With it we not only cover our consumption needs, but also the “need for status”. Therefore, for the money to be motivating, the worker must perceive that the company is aware of his effort at work, that this is recognized and, therefore, he is paid more. It is possibly the main tool to motivate an employee: the higher the salary, the more desire to work and to improve oneself in the workplace. Good work treatment. It seems silly but it is not at all. When workers develop their work in a favorable, communicative work environment that enhances human relationships, they feel more integrated with the company, are happier and, therefore, have better productivity. Future expectations.They are essential to motivate employees. When the worker is aware that they have the potential to improve and advance in their job, their efforts and motivation are greater, since they know that these may have some kind of professional impact that improves their position in the company. from work. We are not machines, but people, and as such we have feelings. For this reason, companies have to take into account the effort that each person makes in their job, regardless of the position they occupy, and it is necessary to reward them in some way. Collaboration at work. It is important to make subordinates participate in the problems of the company, responsibilities must be given and functions delegated. Thus,workers feel part of the organization and are aware that their actions are important and necessary for its operation.
The Deming cycle
The PDCA cycle: Plan (Plan), Do (Do), Check (Check) and Act (Act), also known as the Deming cycle after its creator, Edwards Deming, constitutes the backbone of all continuous improvement processes:
Plan: define the objectives and the means to achieve them.
Do: implement the preset vision.
Verify: verify that the planned objectives are achieved with the assigned resources.
Act: analyze and correct the deviations detected as well as propose improvements to the processes used.
The phases of the service life cycle are a reflection of this basic structure:
The Deming cycle
To a certain extent, each and every one of the IT service management processes must reproduce this structure, ensuring that each of these phases is correctly documented.
The Continuous Service Improvement phase plays an essential role in the verification and action stages, although it must also collaborate in the other stages of planning and doing: (Groover, 1997)
- Helping to define the objectives and associated compliance metrics Monitoring and evaluating the quality of the processes involved Defining and supervising the proposed improvements.
MRP
The MRP I (Material Requirement Planning) or material requirements planner, is the material planning and inventory management system that answers the questions of, how much and when to procure materials. This system orders the purchases within the company, resulting from the materials requirements planning process.
Scope: This system guarantees the prevention and solution of errors in the supply of raw materials, the control of production and the management of stocks.
The use of MRP systems involves a way of planning production characterized by anticipation, trying to establish what you want to do in the future and what materials are available, or where appropriate, will be needed to carry out all production tasks.
It is a system that can systematically determine the response time (supply and manufacture) of a company for each product.
Solution: The objective of MRP I is to take a more objective, sensitive and disciplined approach to determining the material requirements of the company. (Insa, 2006)
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Topic: Structure of an exponential smoothing method for a convenience store |
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Solution strategies |
Advantage |
Disadvantages |
| Implement the moving average strategy for ordering products | It is used when you want to give more importance to more recent data sets to get the resource forecast
towards self-service. |
It is a calculation method that is not very exact with respect to the quantity of product that must be ordered month after month. |
| Implement the method called Deming Cycle in the self-service | This method can be used not only for the requirement of products but for any activity that is carried out in the
self-service is very reliable. |
Since you work with the staff, it is a bit difficult for them to be able to apply it to the letter and if this is not the case, it does not give the
expected results. |
| Conduct a Market Research | It is important since this way we know the degree of interests that our consumers have as a certain product of the store. | Very vague data can be obtained that does not help to investigate the amount of product to order month after month |
| Modify the ordering method using an MRP | This is one of the most used techniques in the industry due to its effectiveness and exact results. | It is a difficult technique to understand and the worker would have to be trained very well and would have to have
engineering knowledge. |
| Conduct periodic customer satisfaction surveys where store problems are also indicated | These surveys will help us to know how good our service is being, remembering that the client is very important to the
company. |
The results can be altered and thus not give a clear picture of what our customers think about our service |
| Hire more skilled workers | This will help us raise the prestige of the store and by applying engineering techniques they will understand them
faster and be carried out as they should |
By hiring more trained personnel, a salary increase would be reached and with this the price of certain
products would have to be raised, scaring away our customers |
| Perform the technique called Consultation to the sales force | Each salesperson estimates what sales will be in their region, which are combined at the district and national level to arrive
at a global forecast. |
As sales are not the same in each region, a very high or very low forecast can be reached that could harm
our profits. |
| Propose a policy of recognition and gratification to the worker for providing good customer service | This is always very important in any company since by motivating our workers they will perform more and it will be
reflected in the profits of the store |
It can generate conflicts between the same workers when they want to take the prize or bonus granted by the company |
| Establish internal communication mechanisms between the supplier and the employee | It will be good since by establishing communication with our suppliers they can give us promotions, lower costs of certain
products and give us a faster and more reliable service |
The worker may lose interest in customers when they enter the store due to
excessive communication that could occur with the supplier when they arrive at the store. |
| Implement the Delphi Technique | The technique is good since certain experts give us advice to know what to order
approximately month after month to be able to meet the demand of our clients |
Being the experts, our competence will doubt the veracity of these advice about how much to order, therefore they will have little
value for us. |
conclusion
What could be observed with this work was that there are many ways to solve a problem and not always the one we want is the best in this case it was able to open a bigger picture for me about which solution is the best for the self-service store, due to the problem of not knowing exactly how to order their products from their suppliers. With this we can conclude that by doing a more in-depth study about different solution methods we can apply the best alternative and lead the company to a better profit.
Thanks to what has been investigated and seen in this work, I conclude that I am left with the original strategy of using an exponential smoothing method since it is the one that best adapts to the business but I would add 2 alternatives: the implementation of the Deming Cycle and to carry out a Market study, based on the fact that they are techniques that will help me improve my original technique in order to implement it properly and correctly.
Bibliography
- Alcaraz, JE (2003). Training and career counseling. MAD Groover, MP (1997). Fundamentals of Modern Manufacturing. Prentice Hall, Hamid, N. (1999). In R. Russell, Operations and Production Management. Mc Graw Hill. Heizer, J., & Render, B. (2009). Principles of Operations Administration Insa, AU (2006). Basic Manual of Integral Logistics. Ediciones Diaz de Santos. Jay Heizer, BR (2009). Definition and importance of the forecast. In Principles of Operations Management. Joseph, M. (nd). Operative administration. Mc Graw Hill Lopez, BA (nd). Industrial Engineering Online. Retrieved on September 16, 2014, from
