Benchmarking Forecasting Processes

Over the last 25 years or so, practices have changed and changed in a significant way. The perception of has changed, and so are the process, methodology and technology to support it. The market dynamic itself has changed, which has changed the way is practiced. It also has gone through a series of name changes. What started as forecasting became business which then became then planning,and, most recently, chain It was not so long ago that was viewed as a voodoo science. No one trusted forecasts. As such, most companies did not prepare forecasts; however, even if forecasts were prepared, they were not used. In 1981, met a forecaster of a large corporation and asked him how well his forecasts were used. His answer was, I don't know. Every month send my forecasts to various functions but don't hear anything back from them. At that time, was an unrewarding and thankless job. Statistics was taught in schools, but it was not adequate enough to do the job. The common perception was that only God could forecast, we human beings cannot. The organizational structure was mostly silo, where each function prepared its own forecasts for its own use. Production prepared its own forecasts to develop its production plan, sales prepared its own forecasts to develop its sales plan, and so did Marketing and Finance. Since different plans were based on a different set of forecasts-for instance, demand plan was based on one set of forecasts and supply plan on another-there always was a disconnect between supply and demand. There was no incentive to improve forecasts because no one was watching their numbers and no one was accountable to anyone. The upper management did not have much faith in forecasts either, and thus did not give adequate support to this function. People working in were not enthusiastic either. They could not see moving up in rank in this profession. The best they could hope for was to move up from the rank of Forecast Analyst to Forecast Manager, beyond that they would hit a dead end. schools did not recognize as a discipline, and thus did not offer any course or degree in the field. Schools offered courses in statistics, econometrics, and mathematics but not in forecasting. The course that came close was Business Cycles, Fluctuations and Forecasting, which was geared toward economic forecasting, not forecasting. Market dynamics that prevailed at the time were not congenial to forecasting. Most of the large manufacturing companies had a stronghold on their brands. They made what they thought would sell. If something leftover, the marketing people would make it go away. Their model was to focus on driving efficiency, lowering costs, and improving asset utilization, which they achieved through large production runs. Between strategic and operational planning what was more important to them was strategic planning, not operational planning. Things have changed now. More and more businesses are now recognizing the importance of in decision making. Consumers are now less loyal and more demanding. They have more choices than ever before. They also have little or no tolerance. If you cannot provide a product they want, someone else will. Competition is becoming more intense. With more and more aggressive advertising tactics, businesses are luring consumers away from their competitors. Globalization has further fueled the competition. Businesses now understand what is important is not customer demand but consumer demand, the ultimate buyer. With that, their strategy changed from push (pushing products out to customers) to (producing what consumers pull or buy). They also understand that an operational plan is as important, if not more, as a strategic one. Without aligning the operational plan with the strategic one, they cannot succeed. …