Forecasting for Short-lived Products: Hewlett-Packard's Journey

FORECASTING FOR SHORT-LIVED PRODUCTS: HEWLETT-PACKARD’S JOURNEY By Jim Burruss and Dorothea Kuettner Short-lived products cannot be forecasted effectively with traditional methods … demonstrates a method that works well with products with a life cycle of 9-18 months …shows the steps one should take in getting the acceptance for pilot testing for a new method. Forecasts improve when human judgment and market data are properly combined. The life cycles of some products are too short for standard time-series forecasting methods. This article describes a method that allows forecasters to use product life cycle phases, marketing events and other known information to arrive at initial forecasts. The method proposed here not only incorporates the impact of key elements such as seasonality, price changes and promotional events but also updates the forecasts as actual market data become available. The method is most appropriate for forecasting demand for technology products with life cycles of less than one year. At Hewlett-Packard (HP) in North America, we have used it very successfully in forecasting the demand for consumer products such as ink jet printer. SHORT-LIVED PRODUCT ...