S&OP, the topic of this special issue, is a great process for managing demand, which also goes by the name of SIOP (Sales, Inventory and Operations Planning), IBP (Integrated Business Planning) and MIOE (Merchandizing, Inventory and Operations Execution. It doesn’t matter what we call it; the priority is to have a framework that facilitates cross-functional collaboration that serves to balance demand and supply while meeting the strategic goals of the business.

I needn’t mention the impact of COVID on our planning which has forced us to shorten the S&OP cycle from monthly to weekly. Make no mistake, S&OP saved many companies from the brink of disaster since the pandemic struck, as supply shortages and shifting demand wreaked havoc on our businesses. I was pleased to see that planning professionals made adjustments to their usual process to react to pandemic-related disruptions because there are longer term factors that are testing S&OP’s ability to manage demand, which also require new ways of thinking.

S&OP is tried and tested but it is more than 30-years old. Since it was first developed, market dynamics have changed, requiring changes in how we plan. Markets are now demand, not supply driven. Competition is intense. New products are exploding, and so are the channels of distribution. All these have added uncertainty that must be addressed. COVID or no COVID, we must ask ourselves how we can evolve S&OP to response to these shifts.

The increasing importance of new products requires a change to the traditional S&OP process. Although new products are reviewed within the product portfolio, they don’t get the attention they need. A significant amount of revenue comes from them and is growing. McCormick USIG, for example, gets 35% to 45% of its revenue from new products; LEGO, 60%; and Hasbro, 80%. To manage their demand, they require not only more attention, but also special skill sets. The success of new products depends on a robust projection of future sales, but they are difficult to forecast because of lack of history. One way to do it is to prepare three sets of forecasts: frozen (where no change can be made), slushy (where a limited amount of change can be made), and liquid (where any amount of change can be made). The other way is to prepare high and low forecasts — low forecasts for fixed contracts and high for flexible contracts. An S&OP step dedicated solely to new products is required.

Another component that needs to be added to S&OP is eCommerce, which is rapidly growing. If S&OP was conceived around brick-and-mortar sales, eCommerce requires a different skill set and strategy. For example, in eCommerce, customers buy less but more frequently. How they respond to a 24-hour online-flash sale is very different from brick-and-mortar. Since Demand Planners have access to customer data (e.g., how much they bought and when), they can develop a better marketing plan based on recency, frequency, and monetary value. Further, it is much easier to do demand shaping in eCommerce. eCommerce requires more agility in the supply chain because orders must be shipped on time, otherwise, it will lose the sale.

Further, in the omnichannel environment, there are a number of ways a product can be bought and shipped: (1) buy from a store; (2) buy online, ship from a distribution center; (3) buy online, pick up at a store; and (4) buy online, ship from a store. Each option has a different effect on the bottom line because of differences in their operating cost — picking, packing, inventorying, and shipping. These are factors that must be clearly identified and planned for in a dedicated eCommerce step in S&OP.

To keep S&OP robust, we must recognize these issues and have a mechanism to deal with them. Then, perhaps, we can bring S&OP up to date and fit to deal with the advancements we have seen in recent years. You’ll find in this special issue a range of excellent articles designed to help you implement S&OP or to improve an existing process, written by some of the leading figures in the field. I trust you will find them valuable.

I suggest using IBF’s S&OP maturity model in conjunction with reading these articles. Available at www.ibf.org/sop-maturity-model, it’s a free self-assessment that identifies your current S&OP maturity level and provides recommendations to progress to the next level, as well as other helpful resources.

Happy forecasting!

Chaman L. Jain, Editor

Institute of Business Forecasting

cjain@ibf.org

This is an extract from the 2021/2022 Special Issue of The Journal of Business Forecasting on implementing and sustaining S&OP. Download an extended preview here or become an IBF member and get both full digital access and the print version delivered to your door every quarter, plus a a host of other member benefits including discounted conferences and training, exclusive workshops, and access to the entire IBF knowledge library. 

The Fall issue Of The Journal of Business Forecasting is available for download now. With insight into updating S&OP for eCommerce, and a candid interview with Rolls-Royce chairman, Sir Ian Davis, about forecasting, planning and Big Data, it’s not one to miss.

Download the journal here.

Is your S&OP up-to-date? Is it helping you to effectively manage and grow demand in the age of online retail and omni-channel order fulfillment? The answer, according to Dr. Chaman Jain, is probably not, or at least not to the extent that it should.

It stands to reason that a business management process that was created in the 1980s, and before the advent of eCommerce, requires updating. To modernize S&OP, Dr. Jain advocates for dedicated eCommerce teams within the S&OP process. Such a team, he argues, should monitor regularly and closely the e-commerce market, make plans, and communicate them to Demand Planners for action. Check out the lead article for more information.

For this issue, I also sat down with Rolls-Royce Chairman, Sir Ian Davis, and got his views on how this aerospace giant manages forecasting, planning and  complex supply chains. He discusses the opportunities lying in Big Data and the IoT, and shared his views on Millenials in the workplace and what it takes to get the C-suite today.

We also interviewed Dr. Eric Siegel, the former Columbia University professor and author of the award-winning book Predictive Analytics: The Power to Predict Who Will Click, Buy, Lie, or Die, and host of the Dr. Data Show on YouTube. Check out out interview with him for tips on getting started in Predictive Analytics, and why it’s a critical best practice for any company operating at scale – that’s not to mention how this technology – when in the wrong hands – can present a danger to society.

Featured Articles

• Answers to Your Forecasting Questions

                By Chaman L. Jain

• Why The S&OP Process Needs A Dedicated E-commerce Team

                By Chaman L. Jain

• Solving Dysfunction in Your S&OP Process

                By Jeff Baker, CPF

• Advocating For Responsible Supply Chains

               By Larry Lapide

• How Does Consumption-Based Forecasting Improve Business Results?

               By Charles Chase, CPF

• C-LEVEL SPOTLIGHT: IBF Talks To Rolls-Royce Chairman Sir Ian Davis

           By Andrew Scuoler, CPF

• The Impact of Integrated Business Planning on Safety Stock Calculation Methods

             By Bill Tonetti

• INTERVIEW WITH AN EXPERT: IBF talks To Dr. Eric Siegel About how Predictive Analytics is Revolutionizing Business

             By Andrew Scuoler, CPF

• Export Predictive Analytics Forecast Slowdown in a Consumer-Led Expansion

              By Evangelos Otto Simos

• Despite Trade Uncertainties with North America, Europe & China, the U.S. Economy Remains Resilient

               By Jamal Nahavandi

The new, special issue of the Journal of Business Forecasting & Planning is available for download now.

This is a particularly interesting issue of the journal because it is written almost entirely by women. Designed to showcase the leading women in forecasting, planning and analytics, this issue brings fresh perspectives from some of the brightest minds in the field.

In a field that often focuses on the analytical/technical side, this issue discusses not only this element of our profession, but also the broader business element that puts analytics and number crunching to practical use.

As we tap into a different demographic for this issue’s articles, we benefit from new perspectives, some of which may surprise you – if you ever thought Liberal Arts wasn’t a natural gateway to demand planning, you may find yourself changing your mind. You may also learn a thing or two about how different areas of study and different mindsets translate remarkably well to facilitating the collaboration and business acumen that are so crucial to succeeding in this field.

Other highlights of this issue include how to use performance indicators to improve forecast accuracy, how to adapt as a demand planner from one industry to another, why forecasters should shift their focus from forecast accuracy to forecast bias, and, the lead article for this issue, how to transition from forecast analyst to data scientist.

The lead article is especially relevant. We are at an inflection point where we are moving away from time series forecasting to artificial intelligence and machine learning. And that means over the coming years, forecast analysts need to develop new skills. Here in this issue, you have a blueprint to do exactly that from somebody who has successfully made the transition.

I encourage you to take advantage of this special edition of the Journal written by the leading women in our field – members can download it for free. If you’re not a member see an extended preview and consider the benefits of membership, and get this journal delivered to your door every quarter.

CLICK HERE TO DOWNLOAD THE JOURNAL

The Journal of Business Forecasting Winter 2017/2018 Issue is available now for download. Below is a letter from the Editor, Professor Chaman L. Jain, revealing why this issue comes at an especially important time in the evolution of business forecasting, demand planning and analytics.

Dear Professional,

We are living in a world where market dynamics are constantly changing. Markets are exploding with new products, channels of distribution are proliferating, competition is getting more intense, and consumers are less loyal and more demanding. To survive and grow in these markets, companies must adapt, and that is exactly what they are doing. In spite of unprecedented challenges, 2/3 of companies report operating margins and revenue growth of 15% or more. The question is, what tools and methodologies are behind this remarkable growth, and how can they be translated into greater efficiency and profitability?

The answer lies in the fact that innovations like Big Data, Predictive and Cognitive Analytics, Machine Learning, Quick Response Forecasting, and Social Sensing have evolved from the conceptual to the real. Products are now “’self-aware” and Facebook data is being successfully leveraged to predict demand. The advancements we have been talking about for years are being successfully leveraged as drivers of growth. We as demand planners and S&OP professionals are no longer asking ourselves what tools of the future will be, but how we implement those tools today for superior demand planning and forecasting.

In this climate of exciting change, there remain some constants: people, process, and technology. People remain key, not least because automation in our field will, ironically, require more people to enter the field to fill a variety of new job functions. But that is not to say these elements are not evolving; software, not forecasters, will prepare forecasts based on pre-determined criteria, and information will include unstructured data gathered from social media.

Journal of Business Forecasting and Planning

Given the advent of automated forecasting software that models, predicts, advises and learns, demand planners will not be directly involved in preparing forecasts. Soon, the responsibility of demand planners will be to build consensus around forecasts, and then communicate that to upper management for action. They must, however, know what kind of forecasts are needed and how to evaluate them. Data scientists, working under demand planners, will use their skill and technology to gather more insight from data, such as what consumers really want and why, and how they feel about our products. This insight will feed decisions that optimize revenue and profit.

Because of the increasing share of new product sales and the expanding role of e-commerce businesses, new processes must be added to manage demand because they require different approaches and strategies. Further, market dynamics are rapidly changing, and so must our plans. To detect market changes quickly and act on them, planners need to shorten their planning cycles. Strategic planners no longer have the luxury to meet just once a year – they now have to meet more frequently. Furthermore, disruptions in both supply and demand are occurring much more quickly and are costly, requiring yet more and better processes to manage them.

Tools such as data mining, artificial intelligence, predictive analytics, and Hadoop will improve market intelligence, which will help in making better decisions. Virtual assistants such as Siri, Cortana, Alexa, and Watson will help in running different scenarios and producing outputs at the click of a button to arrive at an optimal solution. Last year, H&R Block deployed Watson to assist its staff in filing tax returns. The key objectives were to reduce tax liabilities of clients and file the return correctly so that they get the refund as soon as possible. This will help the company to improve its client retention rate. To train Watson, IBM fed 74,000 pages of federal tax codes and thousands of tax-related questions pulled from the H&R Block’s 60 years of tax return data. This technology is remarkable, and is directly transferable to  both demand planning and forecasting.

Since market changes are coming thick and fast, we need to detect market signals early enough to act. Some authors in this issue are already suggesting viable and practical ways to make this happen. To speed up the process of forecasting and, consequently, decision making, Larry Lapide proposes Quick Response Forecasting, and Charles W. Chase proposes Edge Analytics. The technology required to implement these concepts is almost here.

As with all changes, there is opportunity and risk, and hope and trepidation. Yes, technology will eliminate some jobs, but it will create others. An increasingly unavoidable truth is that demand planners and forecasters will transform into data scientists, and that presents an exciting new world of opportunity. We are at a pivotal moment, let’s embrace it.

Happy Forecasting!

Chaman L. Jain, Editor

Featured Articles

1. Event-Driven Planning: An Inflection Point for Operations Planning
By Gregory L. Schlegel

2. Building the Link Between Data and Supply Chain Performance in the Digital Age
By Alan L. Milliken

3. Preparing for Demand Planning in 2025
By Eric Wilson, CPF

4. Digital Transformation: Three Skills Demand Managers Must Have
By Peter Chisambara

5. Quick Response Forecasting: A Blueprint for Faster and More Efficient Planning
By Larry Lapide with Eric Wilson, CPF

6. Real-Time Demand Execution Anticipating Demand at the Edge
By Charles W. Chase, Jr., CPF

7. The Move to Defensive Business Forecasting
By Michael Gilliland

8. Supply Chain Digitalization — Delivering Sustainable Cross-Functional Change
By Neil James

9. I (am) Robot—Future Proofing Your Demand Planning Career
By Andrew Schneider, ACPF

10. CAPEX Predictive Analytics Confirm Renaissance in Animal Spirits
By Evangelos Otto Simos

11. U.S. Economy Defies Conventional Wisdom, Enjoys Non-Inflationary Full Employment Growth
By Jamal Nahavandi

This special issue of the Journal of Business Forecasting is available free for members via the IBF members area. Not a member? Then get a preview of this issue of the journal or become a member today and receive all JBF issues free and a host of other benefits. 

Understanding Just How Revolutionary Omnichannel Really Is

It has changed the way manufacturers sell their products and the way consumers buy them. Manufacturers now sell their products not only to wholesalers, distributors, and retailers but also directly to consumers. Logistics companies now deliver many more packages, mostly small and less bulky, both domestically and internationally.

What’s more, they do it faster than ever before. With these innovations come both challenges and opportunities. It is up to us as demand planners to use the information available in this new paradigm to make our demand planning more effective.

By selling directly to consumers, manufacturers have also become retailers. With that, they bypass the middleman, which raises their profit margins. Just as valuable is access to true consumption data, which greatly improves forecasts and provides a market for products that have already matured in traditional markets.

Omnichannel Means Planners Can Shape Demand Like Never Before

This change also makes it easier for manufacturers to shape the demand, and provides an opportunity to test new products before releasing to brick-and-mortar stores. It even allows for the launch of niche businesses, with Dollar Shave Club and Just for Men being key examples. In short, the data available to us in this new omnichannel world is a potential goldmine. But it’s not all smooth sailing.

There are many challenges that come with omnichannel, too. Among others, it increases the cost of serving consumers. Manufacturers are now in direct competition with their retailer customers. To alleviate that, they distinguish their products by changing packages and configurations. The result? Increased costs.

Transparency Means Lower Costs And A Race To The Bottom

With smartphones and shopping apps, consumers have more visibility of prices on the web and on the shelf. If they find lower prices on a retailer’s or competitor’s website, they want the retailer to match them. Increased transparency makes consumers smarter, and smarter consumers mean tougher business – they want lower prices, they want better quality and they want it faster. Are retailers and manufacturers racing to the bottom, chasing ever smaller profit margins, and if so who will emerge victorious? For now, with the rise in store closings, the odds are stacked against retailers.

Cannibalization is another problem. When a manufacturer starts selling directly to consumers, it cannibalizes its own business base. In seeking higher profit margins by selling direct, they are cutting off their retail clients, unaware of the limitations of this path. As if this wasn’t complicated enough for demand planners and forecasters, omnichannel retail adds to the points of sale, which can reduce the quality of forecasts and increase inventory.

Changes are not going to stop, they will continue apace. Consumer patience is getting thinner and thinner; they want goods now, not hours or days later. Technology is going to improve further, making it easier and quicker to place orders. The ways products are packed and shipped will change, so that consumers can get whatever they want, whenever and wherever they want it.

Analytics Is The Natural Companion To OmniChannel

Big data and predictive analytics will change the way businesses market their products. There will be more and more target marketing, targeting consumers with specific attributes based on demographics, age, and buying habits. This will increase ROI for those who can manipulate their consumer data. This information means we have the power to not just meet demand for existing products, but also test the demand for new products. This is a real gamechanger.

Omnichannel Is Here And It Provides Multidimensional Consumer Journeys

This vision of omnichannel retail is not a fantasy, it is already happening. To succeed, businesses must embrace changes, not resist them. Forward-looking companies are already doing it. Walmart and Kroger are expanding their pick-up services so that consumers don’t have to waste time in finding what they need, nor do they need to wait in line for check-out. Companies like Warby Parker (eye glasses) and Bonobos (men’s clothing)—two of the larger e-commerce-driven retail companies in the United States— are considering building store footprints where consumers can see and touch products before placing an online order. Not to buy instore, but to check size and style before the product is shipped to their home. Combining the digital with the physical creates a new shopping experience—try before you buy and still benefit from the low online prices. Customers get the product at the price they want and companies enhance their brand by providing a multidimensional consumer journey.

Similarly, Amazon Go is going to change the way consumers buy goods. Consumers will walk into a store, use an app to log into their Amazon account, pick up whatever they need, and then walk out without ever going to a check-out counter. Just as the Internet took brands off the street, omnichannel is putting them back, except now it is more affordable for consumers. There are without doubt both challenges and opportunities in the omnichannel sphere – it is time to help position your organization to overcome the former and benefit from the latter.

Journal of Business Forecasting Volume 35 | Issue 4 | Winter 2016-2017

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.

Download a preview of the latest Journal of Business Forecasting.

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In any organization, two functions that play a key role in generating business are Sales and Marketing, neither of which can do it alone. They need each other’s support, as well as that of Operations. Since each function has different roles and responsibilities and are evaluated on different sets of metrics, their agendas don’t align, which become a source of tension. The key concern of Sales is selling, the metric on which it is evaluated; Marketing, increasing market share, and brand building; and Operations is responsible for improving production efficiency and providing optimal customer service with minimum inventory.

The theme of this special issue of the IBF’s Journal of Business Forecasting (JBF) is to investigate the sources of tension across these functions, and what can be done to create harmony. We asked various practitioners to share with us their experiences. Patrick Bower and Glen Fossella believe that tension is healthy as long as it is managed, because many new ideas result from opposing views. In their experience, tension arises from using different and conflicting metrics, unrealistic expectations, lack of information sharing, and not understanding the language of others. Sales forecasts are ignored in favor of stretched goals, orders are accepted without capacity consideration, packaging is changed without considering its impact on inventory and obsolete expense, and criticism is intended simply for personal or political reasons. Tension can be minimized if we understand the constraints of others, speak their language, and think about the interest of the company as a whole. Even if Sales is willing to cooperate, it may not have full knowledge of customer plans due to different timelines, and/or limited access to people who have relevant information. Marketing would certainly benefit if everything is on the table—what is known and what is not. This will help all functions to understand the risks; and if the plan fails to meet expectations, why?

Mark Lawless believes that tension would be greatly minimized if other functions understand that they would receive immense benefit by cooperating—quid pro quo. Jonathan Boult discusses how his company, Goodyear, built cross-functional collaboration within an organization, as well as with its customers. Building in bonus compensation within KPIs such as forecast accuracy, can also help. He further adds that the idea of collaboration catches on fast, particularly during difficult times. In his company, it occurred when demand was outstripping supply, which created a number of problems including large backlogs and poor customer service.

Charles W. Chase, Jr., and Larry Lapide show how and why cross-functional collaboration can be used to grow, not only revenue but also profit. Kevin Reim shows how Marketing can measure the impact of different types of promotions, which can be used to increase sales and profit. Ed Thompson feels that the solution to relieving tension lies in educating Sales, Marketing, and Operations, defining their roles and responsibilities, and providing access to systems for sharing and analyzing information. Although demand is mainly driven by Sales and Marketing, and forecasting is primarily done by Operations, to reap the full benefits of their efforts, they have to put their own agendas aside, and work together for a common goal. This special issue of the Journal of Business Forecasting shows how.

Chaman L. Jain
Chief Editor, Journal of Business Forecasting (JBF)
St. John’s University
EMAIL: jainc [at] stjohns.edu

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FEATURED ARTICLES:

The S&OP Tension Convention: Two S&OP Pros Square Off on the Issue of Conflict within the Process
By Patrick Bower and Glen Fossella

The View from the Sales and Marketing Organizations
By Mark J. Lawless

Demand Planning Needs Customer Profitability
By Larry Lapide

How to Get Buy-In to a Demand Planning Process: A Case Study
By Jonathan Boult, CPF

Using Demand Sensing and Shaping to Improve Demand Forecasting
By Charles W. Chase, Jr.

Striking a Balance between Sales and Operations in the Forecasting Process
By Ed Thompson

How to Measure the Impact of Different Marketing Efforts
By Kevin Reim

Emerging Economies Stall Growth in Industrial Countries
By Evangelos Otto Simos, Ph.D.

2014: The Consensus Outlook
By Jack Malehorn

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

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Volume 32 Issue 2
Summer 2013

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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)

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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.

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A. Jain - IBF

Taking a 7 hour flight from New York to Heathrow, and then dragging yourself down to Central London can be a brutal commute.  But, on this day, there were no strenuous travel plans that were going to distract me from my excitement for IBF’s first London Forecasting Meet-up, hosted by Accenture.  And I am pleased to say, it was a great success.  We had Attendees from companies such as Nokia, Dell, AstraZeneca, McCormick, Rolls-Royce, Argos, Vodafone, and more. I was thrilled to hear how McCormick built a successful demand planning team and process.  I was also very happy to hear how other well known global companies, both up and downstream, improve their operations through better forecasting and planning.

The goal of the IBF meet-up was to provide a networking opportunity for professionals that recognize the importance of forecasting & planning. This event was geared towards professionals who are eager to learn, but lack the professional development budget needed for IBF conferences regionally and abroad.  While the Forecasting Meet-up may not have included the 2-days of rich and structured knowledge that an IBF 2-day conference offers, it still provided an environment to share lessons learned, best practices, and to build a professional network with little or no investment.

The event kicked off with a short introduction from Erik Daren, Supply Chain Consultant at Accenture who welcomed everyone to their office on Fenchurch Street.  Actually, Erik was instrumental in making this event happen, which we at the IBF greatly appreciate.  Allow me to take a second to mention a few things about the offices since they were so kind as to offer them up for our Meet-up. Stepping though Accenture’s office made me feel as though I had actually jumped into a Delorean and arrived in the future. I doubt Accenture does factory tours, but, maybe you can sneak in as a pizza delivery person to check it out :).

Our featured speaker, Rachael Stafford who is the Business Integration Manager at McCormick UK shared with us her journey towards building a strong demand planning and forecasting team.   Rachel mentioned that some key challenges at McCormick were dealing with the company’s silo mentality as well as getting their internal customers and those who supply forecasting information to collaborate to achieve consensus.  She went on to say that, when attempting to achieve a cultural change in this environment, the common question was, “What’s in it for me?” So, Rachel thought, “Why not lunch? Her treat!”  And that is what she did.  Rachael meticulously scheduled lunch meetings with key people throughout the company. These lunches allowed her to reiterate her point, which was that working together is better for both of us, as well as holistically for the company too.  This enabled her to develop strong relationships in pursuit of “one number of the truth” as we say. Of course, all forecasters are often pressured to take down or raise their forecasts at any given time.  But, having key relationships that are less combative allows Rachel and her team to manage the game play that others in the company may create in order to achieve an objective forecast.

When it came time for Q&A there were so many people interested in Rachel’s experience that it almost seemed as though she was being cross examined. One attendee laughingly pointed this out to me later in the evening.  However throughout the “inquisition,” she handled herself beautifully showing her toughness, which is a prerequisite for today’s successful forecasting & demand planning professional.  Rachel will be the first one to point out that we’re not just number crunchers, but strong well rounded professionals.

Finally, we opened up the room for a round table discussion and a key topic of conversation was “Forecasting ownership in terms of where the function should reside and why?” Many companies have forecasting as part of the Supply Chain.  This is an interesting fact since it continues to validate IBF’s benchmarking research on where the forecasting function is finding a home internally.  The guys from Dell seemed to truly appreciate this discussion as expressed to me during the evening. They plan to explore the pros and cons of ownership upon returning to their office and credit the discussion at the meet-up for thinking this way.  As one of the attendees said, “Forecasting needs to be aligned where the major operational decisions are being made.”  It appeared as though the group concurred with this point.  For me, this reaffirmed my prior notion that there are times when forecasting should not be a truly independent function or department.  This is because you risk losing a connection with the business and could lose an opportunity to develop those important relationships.

One thing that bothered me during the discussions was someone had said that we must get the most out of our demand planners before they jump off to another area of the company?  I do think this is contrary to what’s happening with successful companies today. At many companies, Demand Planning and Forecasting is not an intermediary discipline before heading to another area of the company.  Many companies are actually creating hierarchies for demand planning all the way up to the Vice President of Demand Planning. This evolution continues to happen.  Plus, the salary levels are rising at an exponential rate, which will surely keep good demand planning professionals right where they are. IBF’s benchmarking reports prove this.

I must say, even after 2 hours had past, we still could have kept discussing and debating.  Thank goodness for the Accenture people who were mindful of the schedule and let us know it was time to wrap things up.  They were not sending us home though, they were kind enough to reserve space for us at the local bar for drinks.  Good times.

The next London/ UK Meet-up will be in the Fall of 2011.  Watch the IBF calendars for details. We hope to see you there!