It is difficult to arrive at one fixed number of SKUs that a forecaster can manage, because situations vary from industry to industry and company to company. There are several factors at play. It depends on how easy or difficult it is to forecast, what the lead time is, the cost of forecast error, whether forecasts are prepared on an aggregate or granular level, type of data used, whether ABC
classification is used to allocate forecasting time, whether customers’ input are used in reconciling forecasts, and/or the sophistication of technology used to generate forecasts.

This Institute of  Business Forecasting & Planning – IBF Research Report provides guidance on how many demand planners we really need, as well as, how many SKU’s they should manage respectively.

The Table of Contents includes:

1. Introduction
2. How Easy or Difficult to Forecast
3. Cost of Forecast Error
4. Level of Aggregation Required
5.  Type of Data Used
6. Segmentation / ABA Classification
7. State of Technology
8. Survey Results
9. Conclusion
10. Table 1 | Number of SKUs Per Forecaster By Size of Company
11. Table 2 | Number of SKUs Per Forecaster By Total Number of SKUs at the Company

Preview this IBF Research Report 14, HERE.

Volume 33 Issue 2
Summer 2014

Click here to DOWNLOAD a preview of the latest Journal of Business Forecasting (JBF)

Click HERE to become an IBF member and get a JBF subscription FREE

FEATURED ARTICLES:

A New Approach to Effective Demand Planning
By Richard Loretto
Global companies are changing their operating models to meet increasingly complex demands on their businesses. Too often companies struggle with how to effectively adapt their demand planning operations as these models evolve. If not done right, it can lead to unclear and inaccurate forecasting, ultimately putting the long-term viability of the business at risk.

How Does Demand Planning Create Value for the Organization
By Mark Covas
Learn how various industries think about the value a Demand Planning group brings to their organizations. Whether you want to know how to determine if you have the right amount of Demand Planning resources or how you can present a business case for requesting more resources to grow your Demand Planning capabilities, this article will help you demonstrate to your organization the value you are creating.

The Revolution of Talent Management in Demand Planning
By John Gallucci
The Demand Planning field has advanced rapidly over the last decade, and the leading Planning organizations are being rewarded by hiring talent with a much different skill set. Talent Management is a highly debated topic at IBF Leadership Forums, and revolutionary insights are unfolding through these healthy discussions. Are early adopters about to gain a significant competitive advantage, or will Demand Planning continue to be a destination where focus on the basic fundamentals of forecasting will always be more relevant? In this article, I explore multiple sides of the debate, and provide my own outlook for this hot topic.

What About a Telescoping Planning Horizon?
By Larry Lapide
This column discusses various aspects of the Sales and Operations Planning (S&OP) planning horizon in terms of the length of time and the foci of decision making within it. A Telescoping Planning Horizon approach is introduced that extends the planning horizon based on all supply-demand lead times, as well as focuses on various decision-making and decision-support data used in the short-term versus the long-term segments within the horizon.

Innovations in Business Forecasting: Predictive Analytics
By Charles W. Chase, Jr.
There has been a lot of focus on demand signal repositories (DSR) over the past several years with little emphasis on leveraging that information using predictive analytics. The majority of the output has been focused on descriptive analytics, or reporting. If you want to be more proactive than simply basing replenishment on shipment data, you need access to downstream data, analysis, and insights to make decisions that put you ahead of the demand curve. It is about more than just forecasting trends and seasonality, using DSR information for demand sensing to identify and measure market signals, and then using those signals to shape future demand. DSR is a basic foundation but Demand Signal Analytics (DSA) is where real differentiation and value can be gained.

How to Build a Relationship between Sales and Logistics for an Effective Demand Planning
By Jason S. Marinoff
The article shows that the best way to bring Sales and Logistics together is to find common ground. The quick sell to Sales is product availability, and to Logistics, having the right inventory at the right time. Once they understand their mutual interests, their relationship will grow. Good communication is also important. Salespeople are on the front line, and know fairly well the customers’ promotional plans. If they communicate this information to Logistics in a timely manner, it would help to improve product availability.

Predictive Analytics Forecast Snail’s Pace Growth
By Evangelos Otto Simos, Ph.D.
Dr. Simos is Director of Forecasting and Predictive Analytics at e-forecasting.com, a division of Infometrica’s Data Center, and professor of economics at Paul College, University of New Hampshire. This report does not purport to be a complete description of global economic conditions and financial markets. Neither the Journal nor Infometrica, Inc. guarantee the accuracy of the projections, nor do they warrant in any way that the use of information or data appearing herein will enhance operational or investment performance of individuals or companies who use it. The views presented here are those of the author, and in no way represent the views, analysis, or models of Infometrica, Inc. and any organization that the author may be associated with.

The U.S. Economy—Slow, Albeit Improving
By Jamal Nahavandi, Ph.D.
Dr. Nahavandi is Associate Professor of economics at Pfeiffer University School of Graduate Studies, specializing in Business Economics, International Business, and Healthcare Economics. The information in this forecast is gathered by the Journal from sources it considers reliable. Neither the Journal nor the individual institutions providing the data guarantee accuracy; nor do any of them warrant in any way that use of the data appearing herein will enhance the business or investment performance of companies or individuals who use them.

Answers to Your Forecasting Questions
By Chaman L. Jain, St. John’s University

Click here to DOWNLOAD a preview of the latest Journal of Business Forecasting (JBF)

Click HERE to become an IBF member and get a JBF subscription FREE

The Journal of Business Forecasting (JBF) has been providing jargon-free articles on how to improve demand planning, forecasting, supply chain, and S&OP, step-by-step for over 30 years. A subscription to the JBF comes with IBF membership at no additional cost.

The Institute of Business Forecasting & Planning, IBF, wishes to congratulate our 2013 Business Forecasting & Planning Recognition Awards Winners. The IBF has established the Business Forecasting & Planning Recognition awards to recognize the best and most innovative thought leaders, solutions and ideas in the field. This year’s winners are:

Volume 32 Issue 2
Summer 2013

Click here to DOWNLOAD a sample copy of the latest Journal of Business Forecasting (JBF)

Click here to become an IBF member and get a JBF subscription FREE

FEATURED ARTICLES:

“Lean Forecasting: A Competitive Edge”
By John Gallucci

In these highly competitive markets, it is more important than ever to improve efficiency and shrink waste to survive and grow. One important area where waste can be reduced is forecasting, a practice the author calls “Lean Forecasting.” This article describes in detail the wastes that exist in the consensus demand planning process, and suggests tools and ways to get rid of them.

“Leveraging Exceptions and KPIs to Improve the Demand Forecast”
By Alan L. Milliken

Because of rapidly changing market dynamics, exceptions are now part of doing business. To survive and grow in this market, it is important to leverage exceptions; this article outlines a strategy to leverage them. To do that, the author suggests first preparing exception reports by ABC classification, at an account level, by items and category, based on statistical forecasts as well as ones that include overrides by Marketing and Sales, and then taking corrective actions. He discusses in detail which action will be appropriate under what circumstances.

“Is ‘Big Data’ Just More Data?”
By Larry Lapide

This column deals with “Big Data,” one of the latest technology trends being hyped. It discusses what managers need to consider when evaluating whether or not to implement it at their companies. A brief synopsis of a new book introducing the concept of signals versus noise is given, as well as some of the lessons learned from efforts in downstream data—a long-standing “Big Data” industry initiative. The column recommends identifying a few key predictable signals from Big Data to focus on during implementation, and considering the rest of the data to be noise that adds no useful information towards improving decision making.

‘Sales & Operations Planning: Where Is It Going?”
By Tom Wallace

In this highly competitive environment, it is more important than ever to manage businesses efficiently and effectively. S&OP is the process that does just that. The author explains in detail why such a process is needed, and what the future holds. The author also clears up a number of misconceptions about the process including S&OP in real time, when to use Global S&OP, and the role of weekly S&OP. In addition, he covers the powerful impact that S&OP can have when used to support strategy.

“Using Big Data to Enhance Demand-Driven Forecasting and Planning”
By Charles W. Chase, Jr.

Big data is a popular term used to describe the exponential growth, availability, and use of information, both structured and unstructured. Much has been written on the big data trend and how it can serve as the basis for innovation, differentiation, and growth. Companies using real information to sense demand signals and respond quickly to changes in demand can confidently cut inventory, reduce working capital requirements, and free up cash.

“The U.S. Economy…A Glimmer of Hope”
By Jack Malehorn 

“Weak Global Recovery with Changing Uneven Growth Patterns”
By Evangelos Otto Simos

“Answers to Your Forecasting Questions”
By Chaman L. Jain

 Click here to become an IBF member and get a JBF subscription FREE

The Journal of Business Forecasting (JBF) has been providing demand planning, forecasting, supply chain, and S&OP practitioners with jargon-free articles on how to improve the value of their roles and company performance from improved forecasting and planning for over 30 years. A subscription to the JBF comes with IBF membership at no additional cost.

Volume 32 Issue 1
Spring 2013

Click here to DOWNLOAD a sample copy of the latest Journal of Business Forecasting (JBF)

Click here to become an IBF member and get a JBF subscription FREE

FEATURED ARTICLES:

Putting “M”arketing Back in S&OP
By Charles W. Chase, Jr.

Smart organizations share common goals and performance metrics. They are also nimble and work collaboratively, focusing on sustainable strategic objectives. They take a more balanced approach that looks horizontally across the supply chain, virtually eliminating silos and optimizing the process from market-to market and supplier-to-supplier’s supplier. The new focus on the value supply chain is how companies can listen to their customers, assess the market, and then create a more accurate demand response.

S&OP and Strategy: Building the Bridge and Making the Process Stick
By Duncan Alexander

Sales and Operations Planning has come a long way since its invention in the 1980s as a process to align sales and manufacturing volumes. But after early success, the process often falters. This article explains why building a strong bridge between strategy and S&OP will drive successful strategy execution and help build S&OP into the culture.

Developing Complete Software Business Cases
By Larry Lapide

This column discusses the performance elements that ought to be considered in a business case that is developed to justify the implementation of software systems. It espouses the estimation of benefits and costs in three areas of operational improvement: Efficiency, Asset Utilization, and Customer Response. This complete and holistic view is especially needed when justifying the purchase of forecasting and planning software systems.

What Is the Cost of Your Forecast Error?
By Sumit Singh

Forecast Accuracy, a metric that permeates throughout a company’s multi-faceted functions, impacts both the top-line sales revenue and the bottom-line profit margin. Even though managers of organizations are well aware of it, they are reluctant to go through the rigor required to reap its full benefit. This article explores why many organizations and their managers fail to fully capitalize on forecast-accuracy information and what can be done to change it.

How Many Demand Planners Do We Need?
By Robert Langenhuizen

There is no simple way to decide how many demand planners a company needs. The author posits and discusses six essential factors to consider when determining the answer: What is expected from a demand planner? What kind of demand planning process is in place? How many forecasts have to be prepared, and what level of detail is required? How much accuracy is needed? What kind of forecasting technology is available to do the job?

Book Review
By Chaman L. Jain

“Bricks Matter”: The Role of Supply Chains in Building Market-Driven Differentiation By Lora M. Cecere and Charles W. Chase, Jr.

From a Soft Patch to Recession for Industrial Countries
By Evangelos Otto Simos

The U.S. Economy…Stuck in Low Gear
By Jack Malehorn

Answers to Your Forecasting Questions
By Chaman L. Jain

 Click here to become an IBF member and get a JBF subscription FREE

The Journal of Business Forecasting (JBF) has been providing demand planning, forecasting, supply chain, and S&OP practitioners with jargon-free articles on how to improve the value of their roles and company performance from improved forecasting and planning for over 30 years. A subscription to the JBF comes with IBF membership at no additional cost.

Volume 31 Issue 3
Fall 2012

Click here to become an IBF member and get a JBF subscription FREE

Featured Articles:

Successful Global S&OP: Leadership, Change Management, Behavior, & Cross-Cultural Differences
Niels Van Hove explains as businesses go global, the expansion of the S&OP process must follow. He outlines why cultural issues are so important and how to adapt to them. One of the factors in the success of Global S&OP is a company’s ability to adapt to the local culture, while developing and implementing S&OP. It is important to recognize we have the ability to change our company’s culture, but not the country it is situated in. Other key considerations include constructive behaviors, effective change management, and leadership support, all covered in this excellent and timely article.

Forecasting Performance For North American Consumer Products
Robert F. Byrne demonstrates another inventory reduction tactic utilizing forecast improvement and bias reduction by forecasting using daily instead of monthly data. His demonstration includes data from a who’s who of large companies including Procter and Gamble, Unilever, Kraft Foods, Kimberly-Clark, General Mills, ConAgra Foods, and Campbell’s Soup.

Ranking Professional Forecasters in an Unbalanced Panel: A New Approach
John Silva and Azhar Iqbal point out the flaws in the methodology currently used by Bloomberg in ranking forecasters, and provide a solution to improve the accuracy.

What Demand Planners Can Learn from the Stock Market
Charles Re Corr empathizes with the challenges faced by forecasters in industries like utilities, ranching and the stock market. His article details the connection of demand forecasting to the stock market.

Thanks to the IBF
Larry Lapide discusses the role the Institute of Business Forecasting & Planning has played in disseminating the knowledge of sales forecasting and planning over the last 30 plus years.

Taking the Worthwhile Trip from S&OP to SIOP
Sean P. Willems In his article, Sean P. Willems shows how an inventory optimization tool can help to reduce inventory in the S&OP effort.

Acceleration of Global Growth in 2013 Led by the Americas and Non-Euro Countries in Europe
Evangelos Otto Simos talks about acceleration of global growth, which he feels will be led by the Americans and Non-Euro countries in Europe. He also gives updated growth rates and inflation rates of 60 different countries.

The U.S. Economy…Stuck in Neutral
Jack Malehorn discusses why the US economy is stuck in neutral, and presents forecasts of 13 key economic indicators and predicts how they will affect economic growth

Click here to become an IBF member and get a JBF subscription FREE

The Journal of Business Forecasting has been providing demand planning, forecasting, supply chain, and S&OP practitioners with jargon-free articles on how to improve the value of their roles and company performance from improved forecasting and planning for over 30 years. A subscription to the JBF comes with IBF membership at no additional cost.

Read more: http://www.ibf.org/index.cfm?fuseaction=showObjects&objectTypeID=365

Larry has provided valuable input in the development of IBF’s body of knowledge that drives our certification, research, and training programs.  He has contributed over 60 articles to our Journal of Business Forecasting. He provides valuable insight and thoughts on improvement, enabling forecasting and planning professionals to succeed in this challenging environment.”

Larry responded:
“I am deeply honored and humbled to receive this award. While I greatly appreciate receiving it, it would be less meaningful if the IBF hadn’t evolved into what it is today — the preeminent professional forecasting and planning organization on the planet. So on behalf of the entire community I wish to thank Professor Jain and Anish for founding the IBF and for allowing me to be part of its success. And, of course, I personally thank the IBF body and both of them for this award.”

             

At the IBF, we realize that executives are faced with unprecedented pressures to react quickly and maintain a healthy company track record, despite rising costs, shrinking margins, and lack of loyalty from customers. With a proliferation of new products in the marketplace, shorter product life-cycles, the difficulties in succeeding has become even greater. For many product launches, companies have only one shot to get it right because of their shrinking life spans. The need for speed and accuracy is forcing us to look for new ways to make the right decisions, develop more efficient and responsive supply chains, and manage risk and volatility. As a result, companies are searching for the demand signals that can provide a clearer picture on how the business is doing at a given point in time.

Questions arise, do we have the right people to capture and analyze the signals? What signals are available that should be considered? What technology solutions and customizations are needed to be successful? What talent development programs are needed to produce the right people for these roles? What organizational structures and career tracks are needed to retain such talent? And what process advancements and collaborative activities, both inside and outside the organization, are needed to help us to become market leaders for today and tomorrow? And of course, where do you begin?

Well, it begins by stepping outside your organization and learning from other leadership teams that have led their companies to success. You will find these teams at IBF’s upcoming “Leadership Business Planning & Forecasting Forum,” taking place in Orlando, Florida USA on October 22, 2012. This premier executive forum is geared towards professionals like yourself, engaged in higher levels of responsibilities and those that work with them.

Executive Discussion Streams Include:

✲ How to leverage Integrated Demand Signals and Systems
✲ What kind of Talent Management and Organizational Design do we need today
✲ The future advances in Sales and Operations Planning (S&OP)

Distinguished Panelists:

• Michael Wachtel, Vice President Demand Planning, L’OREAL
• John Gallucci, Senior Director of Planning, PINNACLE FOODS
• Cliff Engle, Senior Vice President Global Supply Chain, FENDER MUSICAL INSTRUMENTS
• Mark Kremblewski, Global Business Process Expert – Demand Planning, PROCTER & GAMBLE
• Grant Hoffman, CPF, Sr. Director of Global Planning & Operations, MOTOROLA MOBILITY/ GOOGLE
• Rick Davis, Vice President Business Planning, KELLOGG’S
• Jonathon Karelse, VP – Strategic Planning and Corporate Development,WHOLESALE TIRE DISTRIBUTORS
• Michael Vincitorio, Senior Director Demand Management / S&OP, OFFICE DEPOT
• Rizwan Asim, Director of Supply Chain. MCDONALDS
• Mike Pechtel, Director of Strategy, Planning & Operations, WHIRLPOOL CORPORATION
• Patrick Bower, Sr. Director, Corporate Planning & Customer Service, COMBE INCORPORATED
• Rafal Porzucek, Global Process Leader for Demand Planning, PROCTER & GAMBLE
• Trevor Miles, Vice President, Thought Leader, KINAXIS
• Lora Cecere, Founder, SUPPLY CHAIN INSIGHTS
• Larry Lapide, Researcher, MIT

Of course, there will be the right balance of learning, networking, and fun. Attendees will have an opportunity to network with key executives at our evening BBQ dinner. A lesson or contact that you pick up during a face to face conversation may prove invaluable in the future, along with the solutions discussed during the informative sessions.

We invite you to attend and boost your organizations success by attending the IBF’s Leadership Forum — the only program of its kind with a diverse group of demand planning, forecasting, and supply chain leaders in attendance.

I look forward to seeing you in Orlando!

Kind Regards,
Anish Jain
Managing Director
Institute of Business Forecasting & Planning – IBF

Save by bringing groups! Additionally, have your team attend our “Supply Chain Planning & Forecasting: Best Practices Conference” taking place the day after the Leadership Forum, October 23-24, 2012. Details can be found here: www.ibf.org/1210.cfm

Journal of Business Forecasting – Summer 2012 Issue

Today’s rapidly changing market demands elasticity and flexibility from people, processes and technology. In the current economy, change is the only thing that is consistent and we must change in order to adapt to this constant. However, knowing this doesn’t make it any easier. The Summer 2012 issue of the IBF’s Journal of Business Forecasting provides insight into the challenges and presents solutions covering a multitude of facets in this difficult market.

Alan L. Milliken, a member of BASF’s Business Process Solutions Team, presents a five step process for planning, implementation and monitoring successful change in any arena. This includes determining the firms capability to change and why we need it. How to properly communicate needed change across the organization including how all stakeholders will benefit. He also speaks about developing a public relation program to counter resistance as well as measuring performance to ensure objectives are being achieved.

Also, in this issue, Patrick Bower, Senior Director of Corporate Planning and Consumer Service at Combe Inc., demonstrates why forecasts provided by the S&OP process to supply chain planning are not sufficient in the current market and how to enhance them for better performance. We need guideposts/directions and scenarios for effective planning. In other words, supply chain people need a set of alternate plans or scenario options to use in the event the market deviates significantly from the targeted value.

Michael Morris teaches from his experience implementing change at Yokohama Tire Corporation.

Larry Lapide, a Research Affiliate at MIT, discusses global supply chain uncertainty and the best way to master it.

Robert F. Byrne demonstrates how multi-national consumer goods companies have benefitted by using demand sensing tools for forecasting.

Evangelos Otto Simos talks about uneven patterns of global recovery, and gives updated growth rates and inflation rates of 60 different countries.

Jack Malehorn discusses why the US economy is growing so slowly, and presents forecasts of 13 key economic indicators and how they will affect economic growth.

To receive a complimentary issue of the IBF’s Journal of Business Forecasting, Please CLICK HERE.

To become a Member of the Institute of Business Forecasting & Planning, IBF, and receive a subscription to the Journal of Business Forecasting  please CLICK HERE.

Journal of Business Forecasting

Many consumer product goods (CPG) companies use the Point of Sales (POS) or consumption data in their forecasting processes; Heinz is not an exception. We use the data in a variety of ways, not only for analytical purposes, but also as a communication bridge with various cross-functional partners, including Marketing and Sales, as well as various Supply Chain departments. Heinz uses syndicated data from Nielsen and IRI, depending on the data availability for various channels, and Retail Link for Wal-Mart and Sam’s Club.

ANALYTICS

We rely on the POS data to tell us the health of our businesses, the major categories in which we do business, and our business’s competitors and threats. Some of the benefits of using information from the POS data include the following.

1. They enable us to balance either too much optimism or pessimism that can come from shipment trends alone.

2. They provide more stable and consistent patterns that can be easily used, as well as helps us to identify changes in the trend over time. Shipment data are not true indicators of a change in the trend because their data bounce around.

3. They allow us to do a “sanity check” on the final forecast numbers by using trade inventory (inventory by store) in the data stream.

Providing objective third-party perspective on what’s going on in the marketplace is one of our core responsibilities as forecasters/demand planners. Therefore, we focus on training all our analysts in pulling and analyzing POS data extensively in order to understand the past performances of our brands, as well as the implications of such information on future demand. We also have annual training sessions with Nielsen that show how to use analysis trees and metrics to identify potential scenarios, such as why the base consumption of a particular brand might be growing or declining. Such a trend might be due to a change in the base price, distribution changes, competitive activities, media or marketing events, new or discontinued items, and/or unit sales off the shelf daily at the full price. Since the data exist at multiple levels and layers, we begin at the total U.S. markets level and then dig into deeper levels, such as regions and specific accounts.

Learning such analytical skills is important when deciding on a course of action across various areas of the company. Forecasting is all about understanding the past and predicting the future based on certain identifiable patterns. Knowing how consumption behaves based on our internal plans, budgets, and executions is a great place to start understanding the source of forecast error and identifying ways to improve future results.

COMMUNICATION VEHICLE

The main benefit of using POS data is the richness of information that we find when we analyze such data. Heinz uses this data in number of ways. For Marketing, consumption information is the language of choice when it is communicated to key internal and external stakeholders. Some of these metrics may include volume and/or dollar share based on total consumption, growth or decline in consumption, incremental consumption driven by various trade promotions, pricing, distribution, and unit sales off the shelf. Marketing also uses actual consumption data to project future demand by making some assumptions about the category (Frozen Potatoes), competition (McCain Potatoes), and market share (Dollar or Unit Volume Sales). Sales also uses consumption data to analyze past promotions to determine the lift stemming from such things as discount, display, and ad support, as well as to develop most effective promotional plans for the future.

Since the use of consumption data has always been part of our culture and the basis of our forecasting process, we tied it to the future shipment plans. In fact, from Day 1, “shipping to consumption” has been one of our most important principles. Thus, POS data assumed the top role in determining the future demand. However, Marketing used the top-down approach (starting from category and brand share assumptions of products such as Heinz Ketchup), and then drove down the forecasts to an item level by using various inputs from Sales. Forecasting analysts take these assumptions and inputs and incorporate trade inventory assumptions at the major accounts to derive the final shipment forecasts.

Even after the implementation of demand planning software (Manugistics/JDA), which addresses more granular, short-term supply chain needs, the consumption-based forecasting models—developed more than six years ago—still exist and are in use. These models primarily provide the common platform to talk about the future demand. Intuitively, everyone understands the importance of selling Heinz products off the shelf to consumers. All of us in the organization, whether it’s Marketing, Sales, Supply Chain, or Operations, recognize the need to work together to increase the final sale to the ultimate consumers. As such, the common language we all speak is consumption.

CONCLUSION

Many at Heinz have asked this question: “When can we move away from using consumption in forecasting future demand?” So far, we have not found a satisfactory answer for a variety of reasons including the richness in the available POS data and their analytical power to answer various questions. Not only that, we continue to use it as a basis for cross-functional communication for discussing the status of our brands, categories, and competitiveness, as well as the status of the overall U.S. market, regions, and major accounts.

The extent to which consumption data are used in the demand planning process may vary from company to company, but one thing is certain: Consumption data enrich our perspectives and provide guidance as to what kind of volume can be expected in the future. As forecasters, we’re required to use data streams from various sources to get to the most accurate picture of future demand. Learning to analyze consumption data effectively, draw conclusions, and provide insights is very important if we are doing our job well. In so doing, we do wind up applying judgment and art to the science of forecasting.cover_w08-09

www.ibf.org