The supply chain crisis is a problem for everyone. Bad forecasting means higher prices, longer shipping times, and occasional shortages are annoyances at best, but, for an unlucky few of us, these issues are land mines waiting to blow up in our faces.
My personal explosion happened on August 9th when my Chevy Volt refused to start, charge, or do pretty much anything at all. The error codes I pulled were concerning. To say I was worried was an understatement.
Fortunately, I checked my warranty information and found that I had an 8-year 100k warranty. My busted Volt only had 53k miles. So I towed her to the nearest dealer — 20 miles away.
Freeland Chevrolet traced the failures to a Battery Energy Control Module (BECM). It wasn’t a problem with the engine or the battery, just the control module that monitors charging and voltage. And, most importantly, it was covered under my warranty.
With a quick google search I found that my problem wasn’t unique. Volt forums had threads dozens of pages long where annoyed owners griped about their broken BECMs. There was even a helpful Youtube video on how to remove and replace the BECM, if you are the Tony Stark of DIY auto repairs.
Then I got a disappointing call from the dealership.
“Unfortunately, we don’t have the part available,” the mechanic shared. “So it may not be ready till the end of the week.”
That’s not so bad, I thought. I can share my wife’s minivan for a week and grab a Lyft as needed.
But it was so bad. So very very bad.
The week came and went without a follow up on the repair. On Monday I got the bad news. “Uh, the BECM you need is back ordered. We won’t be able to get it shipped until September 20th.”
“But I need a car,” I replied. “My wife is already annoyed with me taking her minivan everywhere… And I’m annoyed I have to drive a minivan.”
“If you want you can pick up your Volt and use it until the part arrives. You can get it to start if you open the hood, disconnect the 12v battery, then reconnect it.”
I begrudgingly picked up my sad broken Volt from the dealer and hoped I wouldn’t have to use the pop-the-hood trick too often.
Embarrassing my son
We moved to Nashville earlier this year and my son, Parker, just started the 2nd grade. He was very excited for in person classes again. But he was less excited to have me pick him up after an unfortunate incident…
“It will just take a second!” I yelled to the traffic monitor — and the hundred cars waiting behind me to pick up their kids. “I just need to open the hood real quick to get it started!”
Parker slumped as low as he could into my back seat. To this day, whenever I tell him I will pick him up he immediately confirms, “Not in the Volt, right?”
Still no BECM
The expected delivery date came and went. Still no BECM. I became frustrated and escalated my issues to Chevrolet corporate in every way possible: I called; I filed a BBB complaint; I tweeted angry messages.
Funny enough, the social media team from Chevrolet was been the most responsive channel. They call the dealer, Freeland Chevrolet, every week to check the status for me and follow up with a twitter DM.
Complete demand forecasting failure
Clearly, Chevrolet did not accurately plan for this situation. Battery Energy Control Modules are in high demand. Chip shortages are stalling development. And shipping from China is moving at a glacial pace.
While I don’t know the Enterprise Resource Planning (ERP) software Chevrolet uses, I know it didn’t prepare them for this situation. With good logistics, it doesn’t matter how long it takes to build or ship a part. The part is available when it is needed. Chevrolet did not have good logistics.
Demand forecasting is the ability to predict how much you need of a specific product, and when and where to procure, or buy, that product so that you have it when you need it. You don’t want to buy too much, because storage costs money. And you don’t want to buy too little, or you will run out.
For instance, food distributors lose 3.2% of revenue when food spoils and an additional 4.1% when high demand items are out of stock. (Read the full case study) But, Chevrolet is not a food distributor. They should have BECMs on hand.
Hey Chevrolet! Why not try Recurrency?
It is now late October. I’ve gone three months without a working car because of Chevrolet’s complete demand forecasting failure.
To be fair, I lost patience over a month ago and spent $5000 on a 2010 Toyota Prius. I figured if any car had an abundance of spare parts it was a Prius.
I still get updates from my Chevrolet friends on twitter, but they have no idea where the part is.
Perhaps most frustrating, I work for a company that specializes in AI-powered demand forecasting for distributors, like Chevrolet. Recurrency uses historical sales data, and external trend modeling to identify exactly when to restock.
Recurrency demand forecasts have a 61% lower mean absolute percentage error (MAPE). Even when compared with advanced methods, such as Auto Regressive Integrated Moving Average (ARIMA), Recurrency still comes out ahead.
I’m in marketing, so I don’t know much about MAPE or ARIMA, but I know that a 61% forecasting improvement by Chevrolet could have saved me 3 months of frustration and $5000 of Prius.
I plan to sell my Volt whenever it is fixed. And I know that GM/Chevrolet won’t be my top choice for a more reliable replacement. I can’t risk another demand forecasting problem leaving me car-less for months. And Parker can’t risk me turning him into the 2nd grade school pickup pariah.
How Features Are Made at Recurrency
We build updates, give it to users, receive and dissect responses, and then build again. This process is the one that wins the long game and that’s the only game we’re interested in playing.
A brief history of enterprise resource planning (ERP)
If you struggle to understand why something is the way it is, then often all you have to do is look to the past. Figuring out the supply chain industry works the same way, especially when it comes to understanding it’s core technology: Enterprise Resource Planning software, or ERPs.
Not your Father’s ERP
Recurrency is not, thankfully, your father’s automobile, but it does take to heart your father’s advice about investing in quality and getting it right the first time.