Thinking Ahead - Forecasting

Facts: 
Customers are less loyal to the brand and global competition has become fiercer, making it difficult to predict sales. 

Products, sales and distribution channels all have proliferated, and the life spans of products have gotten shorter.  

As a result, some companies are being forced to adopt new ways to improve forecasting and planning, through collaboration. According to the WSJ article Thinking about tomorrow – Seven tips for making forecasting more effective, points to the fact that the future of forecasting depends on the use of advanced technologies, does not talk about existing collaborative and interactive technologies and capabilities that can be exploited.  

Companies use collaboration for integrating operations with vendors and suppliers in ways that give each party access to data that helps keep the supply-chain flowing and inventories lean.  Once such links are established, a manufacturer, for example, no longer has to guess at a vendor’s inventory or future promotional plans, hence forecasts — and sales — improve. 

The role of IT in making a successful forecasting is very critical. 

 According to the article:

Companies should use state-of-the-art technology and standardized data if they’re going to get the most out of collaborative forecasting.

There needs to be a central database where different parties can easily store and view the latest sales, inventory and purchasing data. Historical data are important, too, to gauge forecast accuracy over time.

All such information should use language and formats that are easy to understand and use, and products themselves should be tagged with standardized labels, like universal product codes, so there is maximum transparency for everyone involved, including vendors and suppliers.

Demand planners need a system that gathers data from different departments and sources. They also need strong calculating tools that can run a lot of what-if simulations, such as what would happen to sales if the company lowers or raises the price, decreases or increases the advertising budget, introduces new products, enters a new market, or exits the old one. 

Collaborative and business intelligence tools can streamline the logistics and supply-chain operations. These collaborative technologies do not only greatly minimize the bullwhip effect but can make the entire supply-chain agile for the demand changes. Collaboration and business intelligence capabilities are to be increasingly integrated in the forecasting and planning process.