Shenwick Recruitment Limited specialises in recruitment solutions across the sectors of Demand Planning and Supply Chain

header 1

Shenwick Recruitment Limited specialises in recruitment solutions across the sectors of Demand Planning and Supply Chain

header 2

Collaboration in Forecasting

One of the most commonly asked questions around Demand Planning is "Who should be responsible for the forecast?" The answer is simple - key forecast data should be supplied from a number of different sources who all have responsibility for making the forecasting process effective. The main requirement is therefore COLLABORATION

Forecast Overrides

There is, of course, clear onus on any Demand Planning department to coordinate the demand plan, to analyse forecast variance and to understand the art of the possible around any forecasting package, so that this sort of system is used to its full potential. Giving other business stakeholders access to actually amend system forecasts is particularly dangerous as;

  • Supply Planners may inflate forecasts simply to ensure that more stock is ordered and they have more of a safety stock cushion to help hit service level KPIs
  • Planners may focus only on isolated historical demand and therefore make too many rash, reactive forecast overrides and 'lock the system' (limiting the systems ability to revise forecasts accordingly)
  • Sales teams can sometimes provide inflated forecasts based on over ambitious 'stretch targets' rather than realistic sales targets

The above issues will not always be the case of course, but it would be very dangerous to allow widepsread access to a bespoke forecasting package and would seriously damage the effectiveness of any such system.

But the above mentions and relates a lot to actual forecast packages. COLLABORATION is required in any forecasting process regardless of whether a company purchases specialist forecasting/replenishment packages or whether a business forecast is provided and maintained manually. And this is regardless of whether stock is purchased or manufactured, stock owned or third party replenished. So who is involved in the collaboration process? ;

  1. CUSTOMERS - the customers know their business (hopefully !) and are therefore best placed to provide invaluable information on sales activity, promotional activity, event activity and possible reasons for historical demand spikes which can then be catered for by Demand Planning
  2. SALES & MARKETING - they are at the forefront of actually promoting and developing a business, so they must communicate short and long term plans
  3. FINANCE - need to be heavily involved in the process to maintain visibility of company performance versus forecast
  4. DEMAND PLANNERS - the drivers of the forecast in terms of analysis, creation/amendment and publication to the wider business
  5. SUPPLY PLANNERS - are using the forecast to help effective replenishment of stock, but planners know the products that they are responsible for managing, and therefore can contribute to forecast planning.
  6. PRODUCTION - In an S&OP world, the forecast is the key driver of production planning. The production team must be fully aware of all major changes so that the plan can be amended accordingly
  7. SUPPLIERS - Supplier collaboration is also vital in communicating business requirements and ensuring that each supplier is fully aware of all significant demand changes

In my experience, COLLABORATION improves forecast accuracy and this can only benefit affected KPIs such as service levels, stockholding costs and wastage reduction for short shelf life products. But all key players must be made aware of these business benefits and the COLLABORATION process needs to be consistent and ongoing with a common motivation to drive these improvement (not just done on a whim occasionally and reactively when an issue has arisen).



Article by Jonathan Salt on 25th April 2014