Tag Archives: Forecasting

Why are you forecasting?

In an earlier post I mentioned that forecasting is really only effective when everyone involved owns their part of the forecast and the processes that go into making and supporting it. By itself a forecast won’t help your business, and it certainly won’t fix any structural or logistical problems. But if you use your forecasts as the basis of a conversation with the people who are impacted by it, your forecasts can become a powerful tool for managing and growing your business. This is the value of the collaborative planning, forecasting and replenishment (CPFR) platform.

In my opinion a forecast has no value until it is shared with the all the people who may be impacted by it. And while we may not want to share all the factors that went into making a forecast, we should share with our partners as much information as possible about the timeframe, limitations, expectations and accuracy of our forecasts. If we are asking them to bet their business on our figures, we need to be up front with them about how confident we are in the numbers. We also need to teach them that they can trust us to share everything that we possibly can with them, so that they can be confident about working with us in the future.

 

Everyone owns the forecast

Forecasting and demand planning are key practices in an effective supply chain. But I’m often surprised at how the various teams that are responsible for managing the forecasting process and results see accurate forecasting as someone else’s responsibility. In some cases forecast data is not even shared. And in these cases any success in accurately forecasting demand or consumption is due more to luck than skill.

So everyone needs to own the forecast. And not just the final numbers. Every person who uses the forecast needs to own the forecast, that is, they need to know that they are responsible for letting everyone know what they know about factors that will impact the forecast. If product won’t be available for two weeks or will be restricted due to raw material issues, everyone who depends on the forecast needs to know this. Hiding these factors only undermines the validity of the forecast. And if people don’t trust forecast data, they won’t use it, and then it loses most of its value.

So if you are involved in forecasting for your company, own the forecast and all the issues that come with creating a good forecast. You’ll get better results for your efforts.

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