I’ll venture to guess that if you are reading this, you’re probably already sold on the idea of a forecasting function. That is, you understand the value it provides to the whole organization. Unfortunately, not everybody sees it that way.

Let’s face it, many executives have never experienced the near Utopian results that are promised by forecasting and are hesitant to give it more than lip-service. After all, when they think of new software, consultants and employees,  dollar signs start to swirl in their head with little to no perceived value added. So how do we go about selling it?

First, let’s look at some improvement opportunities that your executives can wrap their minds around:

1. Inventory

More accurate forecasts and a properly set up planning system result in proper (not necessarily lower) inventory levels. Through forecast improvements, I have always experienced overall decreases in inventory levels. This means not only few dollars tied up collecting dust, but also less risk of obsolescence, more efficient Warehouse operations, fewer damaged goods, etc. At one company, I was able to completely eliminate an off-site warehouse for raw materials and reduced finished goods and sub-assembly parts so drastically that we cancelled plans to open a third production plant. Lower inventory levels also help to expose issues that are otherwise masked or easily covered up. As the saying goes, you don’t know where the rocks are until the water recedes.

2. Customer Service

Sometimes an improved forecast identifies a need for higher (proper) inventory levels. The result will be higher fulfillments and therefore higher Customer Satisfaction. Whether higher or lower, the goal is to have the right inventory levels. A lost sale is never recovered and a lost customer can take years to make up. Caution: don’t immediately jump to more inventory as a solution when other factors can offset it, such as reduced lead-times or change-over times.

3. Operations

Improved forecasting aids in Capacity Planning. Warehouse space, production equipment, level-loading needs, workforce levels, and longer range facility and equipment needs are some of the ways good forecasting helps executives prepare for success. All of these capacity constraints are expensive and can be quite difficult to change. No one wants to find out that they need to order three new production lines… six months ago. (Yes, that happened.)

4. Sales & Marketing

In addition to the aforementioned Customer Service benefits, good forecasting and analysis facilitates a successful product launch. Likewise, a lack of good numbers and launch assumptions can absolutely doom a new product, or at least result in significant lost revenue and unhappy customers. Along with this, proper analysis provides insight on changing trends, product mix, attachment rates, and life-cycle planning.

5. Purchasing

A good forecast leads to good supplier partnerships. By communicating a realistic purchase plan to your suppliers, they benefit in all of the same ways listed above. When you stop jerking your suppliers around (expedite this order, cancel this order, wash, rinse, repeat), they will service you better, accommodate special requests more willingly, and they will value the relationship more than ever. But wait!  It gets better!  Your negotiating position just drastically improved! (Three exclamation marks in a row!)  For all of the same reasons stated above, your supplier is now more efficient (lower costs) and desires more than ever to have customers like you.

All of that is well and good, but to the cynical executive it may be just another bag of promises waiting to disappoint (like low-fat, gluten-free cookies on your birthday). What is a highly capable (yet humble) manager to do? You have to prove it!

Getting Started In Forecasting With Limited Resources

Before asking for a new employee (or department), start with what you have now and do what you can. Maybe you don’t have the bandwidth to forecast for the whole company, but perhaps you can focus on one product line. Perhaps the level of analysis isn’t up to par with what you are accustomed to, but something is better than nothing. Take the time now to measure the historical and current forecast accuracy (if a forecast exists at all), inventory levels, service levels, etc., all for this one line, then improve it. Nothing sells better than success be it lower inventory, higher fulfillment rates or a successful product launch. By getting one project under your belt, you can demonstrate the measurable results and quantify the savings to the organization.

This more than anything can help sell the further benefit of taking it all to the next level by investing in someone nerdier than me (no offense), who lives and breathes this stuff and loves to do the type of analysis warranted. I’ve been able to make significant improvements and gain cost savings all by myself but I’ve been able to do just as much by knowing my limitations and getting to right person for the job. Let me be clear, forecasting and analytics is not a role you just tack on to someone who has a little free time – find someone who understands it and gets excited when they talk about it and all will be right with the world.

Even though you know why predictive analytics is important to your organization, others may not. Some people in your company don’t understand it yet. That’s OK. But you need to get your executives onboard and buy in to the idea. Here the 5 steps that, in my personal experience, have been key in getting the resources you need.

Learn Their Language

One of the first steps in any forecasting cycle is defining the need and this should be the first step for getting executive support for predictive analytics and advanced demand planning.  You must understand that it’s not just about presenting the benefits you know you can deliver but also highlighting what executives need. The last step in any forecasting cycle is managing and communicating the output. But before that, you collect data and model it. Think of garnering support from executives in the same way – understand the need, figure out how predictive analytics fulfills that need, then translate it to executives in their language.

It could be that they are less concerned with details and need summaries and high-level insight to make strategic decisions. They most often deal in numbers and sometimes just impact on EBITA or cash flow. They may not want to know the probabilities or what models you used but rather the risks and opportunities predictive analytics can reveal. Before you sell the idea of predictive analytics, you have to understand what they want to buy and what they can afford.

Educate

This is not only about educating executives but everyone impacted by predictive analytics (which is everyone). Whether others realize it or not, forecasts are essential because every business decision relies on predictions. When people see value, you see support. Another way to educate the organization about predictive analytics is building the brand of your function/department. After all, the people you need to influence won’t be educated about the benefits of your value proposition if they don’t know who you are or what you do.

This also provides a foundation for aligning your team’s capabilities with the goals and aspirations of the broader company. Moreover, a strong brand can enable demand planning to be proactive about its role in the company. A good brand is all about who you are and what you want to be known for in the organization. It may seem unconventional to brand an internal department in the spirit of an Apple or Amazon, but it can have tremendous benefits in one’s ability to compete for attention, budget and influence within an organization.

Find A champion & Find A Sponsor

This may or may not be the same person. A sponsor is someone that has some authority and ability to speak on behalf of the executives and helps with resourcing or sustainability. A champion can be anyone that is influential and acts more as a cheerleader for your process and department and really believes in what you are doing and helps other see its advantages. Do not assume this person/s must be from supply chain either. In addition to production and purchasing, I have found support for advanced analytics from in a CFO, a VP of sales, a director of online marketing, and even someone from HR.

Close The Sale

Salespeople will tell you that the number one reason people lose a sale is because they don’t ask it. Rarely are executives going to come to you with a pile of money/resources and tell you to build the planning department that you desire. You need to build the case and ask for it. This means a few things like understanding and developing a Return on Investment (ROI) for what you want. This is one of the biggest questions I get from people trying to build departments and I admit this is a tough one.  But if you cannot tell your executive team how their investment will make money, how can you expect them to buy what you are selling?

It is very important to do your research both internally and externally, and, with confidence, provide what hard and soft benefits the company will gain from your proposal. Be willing to provide the hard truth that some may not want to hear about what is being missed currently and what the advantages and limitations of changing things will be. Be honest, once again be confident, and, whenever possible, have rigorous deductive proof. And don’t oversell, know when to stop talking and when to start listening – but not before you ask in clear terms what you and the company needs to be successful.

You May Not Get What You Want

To quote the Rolling Stones, you can’t always get what you want. But if you try, you might get what you need. Finally, to be considered a part of the executive team, and not an outsider, you must appreciate executives’ perspectives. You must be sensitive to the organization’s structure, limitations and priorities. At times, executives may be sympathetic to the need for a formal predictive analytics and planning function but may let other priorities come before providing enough resources to support it. Because of this, be patient – winning the confidence or support of top management may take time. Management may not be ready to give you all that you’re asking so take what you get. Use what they give you and make the most of it, and incrementally improve. Over time, they will recognize the need for this function the day will come when they can provide more support.