Comments on: Forget Demand Driven Forecasting, We Need Consumer Driven Forecasting

By: Charles Chase

Charles Chase — Thu, 22 Aug 2019 15:02:40 +0000

Yes, that’s fine repackaging demand-driven to consumer-driven because if you are truly doing demand-driven, as I define it, then you are consumer-driven. However, you cannot effectively do consumer-driven unless you report into marketing, not supply chain. In addition, you need to become analytics-driven. It cannot be done using simple exponential smoothing methods, Also, you can’t possibly be consumer-driven when you’re located upstream in supply chain too far removed from the actual consumer. Plus, you need to know/understand all marketing tactics (programming) that influence true consumer demand.

So, if you are located up stream in the Supply Chain organization and forecasting shipments/sales orders then you are definitely not consumer-driven. Shipments is the supply signal and sales orders is the replenishment signal. True demand is POS/Syndicated Scanner data. You also need to know how to apply more advanced methods like regression, ARIMA (X), and Machine Learning methods.

So, be careful that your repackaging isn’t just another S&OP repackaging to IBP, or MRP to DDMRP. No difference, just business as usual with a different name.

By: Anonymous

Anonymous — Mon, 19 Aug 2019 20:24:50 +0000

Yes Charlie I have read all of your and Mike’s books and loved them all. I almost thought of using your term of consumption based modeling but I wanted to draw more of a contrast to what we (me and what you talked about in your books) and what traditional planning and DDMRP does.

I would hope you are honored and flattered I and others stand on your shoulders and are only passing on or repackaging the insights your gave us or already provided.
Eric

By: Charles Chase

Charles Chase — Mon, 19 Aug 2019 18:27:14 +0000

Eric,

I find your article post interesting and quit ironic, since all the things you mention are in my book titled, “Demand-Driven Forecasting: A Structured Approach to Forecasting”, 2nd edition (2015).. In fact, in another one of my books I mention that CPG companies need to forecast true demand, which is POS/Syndicated Scanner data–closer to the consumer. I call it “consumption based modeling” in another book that I wrote titled, “Next Generation Demand Management: People, Process, Analytics and Technology (2016).

In both books I discuss in detail true demand sensing and shaping using POS/Syndicated Scanner data. First, modeling those factors that influence demand (e.g., price, advertising, sales promotions, in-store merchandising–display, feature, Feature/Display, TPR and others). How you can run ‘What If” simulations, and then, using it as a leading indicator in a shipment model using the MTCA process. Finally, I define true demand signal as POS/Syndicated Scanner data, sales orders as “replenishment signal”, and shipments as the ‘supply signal”.

Obviously, you read both books based on your article above.. I’m flattered.

Charlie .