Flostock issues a newsletter every month


Flostock news #1

DSM forecast accuracy very high. A multi-disciplined project team from DSM and Flostock designed a supply chain model for the food ingredients industry, specifically for the yeast extracts of DSM. The demand forecast for the second half of 2012 was made in May 2012 and the average accuracy over said whole period was 97,5%.

Flostock News#2

Green shoots in the economy. Intention anticipates behavior. Consumer sentiment improves before retail turnover increases. And permit requests anticipate construction spent. When looking carefully at the European scene, a few early signs of an impending economic recovery are visible.

Flostock News#3

The prices in the commodity super cycle peaked in 2007, dipped strongly in 2009, recovered and are now going down again for many years. It can be understood if you include the so-called Lehman Wave. The Lehman Wave, which was first described in 2009, can be defined as a global destocking wave that went through the industrial supply chains after credit became scarce in the panicky period after the Lehman Brother bankruptcy (hence the name).

Flostock News#4

Several Flostock customers are reporting a strange wave in their sales pattern with a wavelength of 10 – 15 months and an amplitude of some 5-10% sometimes even more. In some cases this wave was not visible before the Lehman crisis. Flostock has found the cause and can predict it’s path.

Flostock News#5

There was panic in the corridors of DSM and many other companies towards the end of 2008, when turnover was dropping week after week in an alarming rate and the newspapers were full of bankrupt banks, insurance companies and car sellers. Commodity prices were dropping like a stone. Politicians were in disarray. Nobody knew whether the banking system as a whole would survive.

Flostock News#6

Although Black Swans are by nature impossible to predict, once you see one, you can include him in your Flostock system dynamics Model. This allows you to analyze the effects of the Black Swan on your business. Next step is testing your responses in various scenarios. A company with a Model that absorbs Black Swans will thus become more Anti-fragile and benefit from volatility.

Flostock News#7

McKinsey (a consultancy) published an interesting article in the Supply Chain Management Review describing the best practices in the crisis with reference to our publication about the Lehman Wave.

Flostock News#8

Since the Lehman bankruptcy the world has become a lot more volatile. On top of the volatility, in some markets, there are clear signs of repeated bubbles in pricing and demand. When the logistic driven volatility crosses a certain threshold, it apparently results in stockpiling, rising prices, more shortage and further stockpiling. Flostock has found a way to model these exponential phenomena and predict their course, including their collapse.

Flostock News#9

Run-aways in demand and price can be modeled for the past and their likelihood for the future can be predicted. This price/supply/demand balance can be coupled to the standard Flostock model that already contains demand, inventory, capacity, cost and margin. The strong volume restrictions in commodities can thus explain most of the price volatility.

Flostock News#10

Royal DSM, Eindhoven University and Flostock published a review of the model forecast that was made for DSM in 2009, with as first conclusionthat modeling a supply chain to analyze a business and to forecast demand is possible.

Flostock News#11

If you are worried about interference from the tensions at the Crimea with the supply of raw materials or finished products to or from Russia, and you don’t know how to quantify it, give us a call and ask for a Virtual Reality Supply Chain Model.

Flostock News#12

Rare Earth Metals, with fast growing demand, limited production capacity, artificial restrictions and WTO-enforced releases will be very volatile the coming years with a lot of stock & flow effects. These markets are screaming for supply chain modeling.

Flostock News#13

The world is increasingly Volatile, Uncertain, Complex and Ambiguous. All oscillations in the real world are damped, just like ecomic ones.Life cycle analogy (LCA) is a qualitative forecasting method based on the idea that similar products will have a similar life cycle pattern. The Shale Gas revolution is changing the petrochemical world.

Flostock News#14

Oscillations continue only if energy is added. The naïve forecasting method is also the simplest. In effect it means that you assume that tomorrow is today. Only when products are taken out of the long supply chains, the manufacturers can enter new products into the beginnings of the chains. With good modeling, including the Lehman Wave, these relations can be quantified.

Flostock News#15

A wave of Mergers & Acquisitions is coming our way. American companies have some 1300 billion dollars in the pocket that they want to spend in Europe, since for tax reasons they don’t want to take the money home.  

Flostock News #16

A system oscillates if it has stocks, flows and feedback loops with lead-time, and if managers  are impatient to close a gap. If the gap closing time divided by the lead-time is small, a system oscillates. 

Flostock News #17

The oscillation described in News #16 is maintained by a notorious Prisoner's Dilemma, according to Flostock's Law nr 17. We further sheds some lights on Car sales in Europe, we announce our presentation together with DSM at the IBF and we introduce a new Flostock Tool for Dynamic Finance. 

Flostock news #18

The Flostock Method has been scientifically proven in a recent article. We explain why this is relevant to you, how this is related to the Lehman Wave and how it influences the Flostock approach.

Flostock news #19

Investment cannot be stimulated by a larger money supply (QE), nor by lower interest rates. Investments are low now because the industry is still not producing at full capacity, which is because consumption is still lower than its peak in 2007. 

Flostock News #20

To understand the price drop in oil we should be looking at available capacity versus consumption. The fact that the Flostock models can predict the future is based on the effects of stocks. The ninth alternative to the Flostock method is the Delphi Method.

Flostock spoke about volatility and the bullwhip at the ICIS World Polyolefins Conference in Amsterdam on 25-26 March, 2015.  Gaps, defined as the deltas between stocks and desired stocks, are proportional with adaptation time. Judgment is one of the so-called Qualitative Methods and is used a lot because it is so simple. It means that the forecast is based on the opinions of (presumed) experts, such as customers, industry leaders, experienced sales people, or simply ‘the boss’.  

We are proud to present our breakthrough forecasting model for the Dutch housing market. For the first time, the 11-year cycle that has plagued the construction industry for more than a hundred years can be explained and forecasted. The model not only predicts the number of houses that will be built, but also the average house price. This prediction does not look good. We foresee a new decline in the near future, both in price and volume and can explain why. The intended audience includes, besides the construction industry itself, governments, industrial producers of construction raw materials, retailers, mortgage banks, home owners, schools with a construction related curriculum, media and real estate investors. Flostock has created this model in cooperation with Buildsight, a renowned market research agency specialized in the construction industries, using techniques developed with TU/e.