Top-down & Bottom-up Forecasting In S&OP

TOP-DOWN & BOTTOM-UP FORECASTING IN S&OP By Larry Lapide (This is an ongoing column in The Journal, which is intended to give a brief view on a potential topic of interest to practitioners of business forecasting. Suggestions on topics that you would like to see covered should be sent via email to llapide@mit.edu). This May I was invited by my colleagues at the University of Tennessee to give a presentation on the importance of Top-Down & Bottom- Up forecasting in the Sales and Operations Planning (S&OP) process. The last time I had covered this type of forecasting in one of my columns was eight years ago in the Summer 1998 issue of The Journal of Business Forecasting (JBF). Its title was “A Simple View of Top-Down Versus Bottom-Up Forecasting.” When I wrote that piece, I felt I had given the topic the coverage it needed for a very long time. However, having to prepare for this year’s presentation opened my eyes to the fact that, since I wrote that article eight years ago, much has changed. The topic of Top-Down & Bottom-Up forecasting has become even more important. The expanding globalization of business, the continuing move from push to pull manufacturing, and the rise in ...