From soliciting input from diverse departments to using employees and customers in prediction marketing, companies are recognizing the importance of fully utilizing one of their greatest resources: their employees. While business forecasting and resultant S&OP have generally been the purview of professional forecasters, having contributions from the whole company can give forecasts a leg up on accuracy and effectiveness.
Forecasting (the business of looking ahead to predict events that may affect business success) and S&OP (the processes that align forecasts with day-to-day business operations such as supply chain management) are more and more crucial in an increasingly competitive, global marketplace. Understanding the drivers of consumer demand—seasonal fluctuations, innovations, and changing economic conditions, for example—can make or break a business. And while no forecast can possibly account for every variable, the better the forecast, the better businesses can prepare for the future.
So, how to build a better forecast?
Sara Park, senior manager in forecasting and demand planning at Heinz North America, says of the process of bringing forecasting and S&OP to Heinz: “In the beginning, supply chain were blaming marketing for how inaccurate their forecast was, but slowly an understanding evolved that it wasn’t about finger pointing: that accurate forecasting was about working together, sharing information, and communicating effectively.”
Clearly, the more information forecasters have, the deeper and more detailed the resultant forecast can be. One way to obtain a lot of high-quality information? Ask the people who work for and with you. By soliciting input from across departments, you can compile a wealth of information, expertise and experience. You can get local and global perspectives. Certainly you’ll get a broader understanding not only of products and customers but also of the variables that can potentially cause fluctuations in demand.
Products that have a long history and are relatively unaffected by change in the marketplace are reasonably simple to forecast. But not every product has a behavioral history, and here it is especially useful to be able to tap into the collective wisdom of your company. New products; underdeveloped or unfamiliar markets; significant, unexpected events such as war or natural disaster; exceptionally long planning horizons: when these are part of the mix, historical data may be non-existent or useless. In these cases, the knowledge and experience of your team may be the best (or the only) information you have to build a forecast around. No one understands the issues specific to your products or services better than your own team; not utilizing this resource to its fullest advantage is tantamount to flushing money away.
Increased knowledge isn’t the only advantage to be gained. Bringing in team members from the different divisions of the company generates good will—departments that feel they are operating in isolation may feel more included, optimizing chances for an across-the-board buy-in on the S&OP strategies that emerge. Breaking down organizational and informational silos allows for the company as a whole to identify areas of weakness that need to be shored up as well as strengths to be exploited. And keeping the process in-house eliminates concerns over privacy and confidentiality.
A how-to for making the most of your team
Research into collaborative forecasting efforts shows that a necessary element for success is consistent communication. Many companies schedule regular, monthly meetings to keep the team moving forward and give the project a predictable cycle that members can count on. The meetings are times to gather information, come to consensus decisions and establish and communicate unified strategies. Far-flung team members can be linked in in real-time, via video conferencing.
Regular meetings with the team ensure that forecasting models are aligned when differing departmental goals and agendas might otherwise impede communications and progress. According to the report “Sales and Operations Planning and Business Forecasting: Tools and techniques, successes and failures” produced by FreshMinds, “Meetings should be well structured and focused, to maximize efficiency . . . each meeting should provide baseline demand forecasts and rough-cut demand and supply plans, aggregated and translated for accessibility.” Regular, highly focused meetings allow for consistency and unity, but also for transparency, accountability and ownership.
You too, Boss.
One of the best ways to guarantee that someone takes ownership of a project in a meaningful way is to get that person’s boss on board. The credibility that can come from above should not be underestimated. Says Heinz’s Sara Park, “We couldn’t have done anything without the initial support from the Vice President of Marketing and the continuing support of our senior management.” Getting the executives to buy in may involve demonstrating the real value of the project. Once that’s achieved, however, the effort pays for itself in increased accountability of the team members, improved communications up, down and sideways, and diversity of perspectives and experience.
Training (or recruiting) the right team
From such a diversity of perspectives must come a unified strategy for predicting and tackling future challenges. Often, existing staff members can fill—or be trained to fill—many of the roles crucial to making forecasts. However, complex forecasting tools or costly and complicated S&OP software can require extensive training, and companies are sometimes reluctant to fund such undertakings, believing it would be more cost effective to hire new staff.
However a company chooses to meet the challenges of the future, it’s important to remain flexible. Be open to the advice that’s coming from the assembled experts; be ready to change or adapt when a forecasting model is clearly not producing the desired results; be armed with the best information from the best team; keep a close eye on the bottom line. Says the FreshMinds report, “ Forecasting is never going to be perfect, so companies need to be ready to change assumptions and reassess if forecasts are off … however, blind investment is never the solution; rather, finding and executing the best forecast methods requires time, effort and an open mind.” Building the right team, one that is capable and eager to take on the complex task of building forecasts, can give a company a genuine advantage in today’s increasingly complicated and unpredictable marketplace.
Author: Shannon Perry, journalist, the forecaster
