Journal of Business Forecasting Articles Issues

Supply Chain seeks to optimize the triangle of service, cost and cash in a way that best serves enterprise strategy and maximizes a company’s competitive advantages. And, given it manages how resources are utilized, Supply Chain is critical to the success or failure of a company as measured by Return on Capital Employed (ROCE). In this article, I discuss how this function must take control of enterprise planning, from helping to develop enterprise strategy to delivering on tactical execution. Further, I highlight the redundancy of duplicate planning processes, advocating alignment under Supply Chain.

Sales & Marketing want inventory on hand and ready to sell, while Production is focused on low cost through long production runs and few changeovers. Typically, neither is held accountable for inventory performance resulting in negative impacts on inventory costs and/or customer service. In this article I provide practical methodologies to optimize inventory management using Coefficient of Variation for Volume Variance Analysis. This allows Demand Planners to identify the optimal inventory and manufacturing strategy for each product category, thereby keeping sufficient inventory to maximize sales while controlling production and carrying costs. Alan is an IBF Certified Professional Forecaster (CPF).

This column provides a primer on how planning decisions might be made under uncertainty, when the probabilities of future outcomes are unknown, versus under risk where probabilities of future outcomes are known. I discuss how several companies leveraged their understanding of these concepts to respond effectively to the COVID-19 pandemic. I also include a Payoff Matrix that facilitates effective decision-making in uncertain environments according to the amount of risk a company is willing to undertake. A hypothetical COVID-19 analysis is provided with three decision styles that can help your demand and supply planning during the pandemic and for any disruptions the future may hold.

The Consensus Review is where demand assumptions are discussed and understood and where forecasts are agreed upon. It is the final step before publishing the forecast, making this a critical part of the planning process. In this article I discuss what to do before, during and after the Consensus Review to ensure an effective meeting that results in a reliable demand plan that gains the confidence of all functions that will use it. I discuss the objectives of an effective Consensus Review, how to construct an agenda, which forecasts to include, which data to focus on, how to present data, and how to facilitate constructive dialogue and participation.

Workforce planning and scheduling is one of the major challenges in the hotel industry, with multiple variables impacting guest demand and attendance. For operational efficiency, however, effective forecasting and workforce planning is crucial. In this article, we reveal a case study for a large hotel chain which sought to identify the most accurate forecasting methods to optimize workforce planning. We tested various forecasting models to forecast customer visits, broken down into different parts of the hotel (restaurant, lounge-bar, lobby, etc.) and at different times of the day (breakfast, lunch, etc.). We compare the performance of traditional time-series models and Machine Learning, revealing the forecast accuracies of each, and the dollar savings of the most effective model.

A supply chain Control Tower allows for end-to-end visibility into a supply chain, providing the ability to access key information, analyze it, and act on it for superior decision making and efficiency. Key benefits include balancing inventory across locations, optimizing buffer stock, and reducing associated carrying costs. In this article, I reveal the key elements of a successful implementation, including creation of an information hub; shared reports and scorecards to manage partner relationships; buy-in from internal functions, suppliers and customers; and development of a risk management framework. I also provide a breakdown of the three implementation phases with best practices for each.

When soliciting investment in demand planning resources, the Finance team in any organization will perform a cost-benefit analysis, the results of which will inform senior management’s decision whether to approve the investment. In this article I discuss how ROI is calculated for investments in forecasting software and talent, and the different factors that need to be considered. This will prove useful for demand planning professionals looking to understand how Finance will perceive requests for new resources, and how to link such requests to key financial metrics.

Due to an unprecedented mix of expansionary fiscal and monetary policies between the first quarter of 2020 and the fourth quarter of 2021, the U. S. economy has entered a wage and price spiral, the likes of which we haven’t seen in decades. The rate of change in the M2 money supply (cash and near-cash) rose from the historical average of 7% to 17%. In the same period, the average quarterly change in total government spending jumped by an unprecedented rate of 27%. The combination of expansionary monetary and fiscal policy has led to the highest rate of inflation in four decades.

S&OP allows an organization to balance demand and supply, thereby cutting operational costs, freeing up cash, and improving customer service. The benefits are clear — effective implementation, however, remains more elusive and, for many companies, the first steps are often the hardest. In this article I reveal how to get started with S&OP by indentifying the appropriate function, channel, business unit, brand, or product to launch from. I discuss the criticality of starting small and securing sustainable, quick wins before attempting to launch a mature, enterprise wide process. I also dive into how using a maturity model identifies areas to improve and how securing allies in senior leadershop faciliates buy in.

Executive sponsorship is key to successful S&OP deployment and an ongoing, sustainable process. In this article I reveal what is required from C-suite sponsors and what their specific role and responsibilities should be. I discuss how to secure their support by connecting the benefits of S&OP to strategic priorities, as well as tips to secure the support of managers to deliver the cross-functional collaboration so critical to S&OP success.

This column deals with the role of the Sales and Operations Planning (S&OP) process when there are uncertainties in a supply chain, the likes of which emerge under extreme situations like the COVID-19 pandemic. I discuss how S&OP is designed to deal with risk, but not extreme volatility like we are experiencing now. In such cases, we need a temporary ‘Quick Response’ operational planning process that sits alongside the regular, formalized process of S&OP. I explain how such a tactical framework allows us to react quicker to demand and supply shocks in a way that S&OP cannot.

There are three components to effective S&OP implementations. When in place and implemented well, they will be mutually reinforcing and will help ensure long-term benefits to an organization. The first component is “thought leadership”, which provides a north star to S&OP implementations. The second is “structured deployment”, which ensures results will scale and adequate resources will be in place to support S&OP practitioners. The third is “governance”, which is critical for closing the loop and ensuring accountability over results achieved by S&OP over time.

S&OP is a cross-functional, collaborative forum that acts as the ‘operating system’ for a company. In this article I discuss how involvement of Finance in this process allows us to understand the financial implications of the demand plan, facilitating fully costed and financially viable demand management responses. It also allows us to know inventory and production costs and to develop accurate revenue and earnings estimates. I also reveal how Finance’s involvement leads to a robust Annual Operating Plan, avoiding the issue of disconnects between the plan and what actually occurs.

Product or service strategy, and the ability of different functions to serve that strategy, makes or breaks a company. It stands to reason then, that S&OP should be designed to specifically support the enterprisewide goals of your business. Most companies have one of three overarching strategies: Product Leadership, Customer Intimacy or Operational Excellence. This article reveals how to identify which category your company falls into and how to adapt your S&OP to each strategy (with segmentation underlying each approach), along with practical tips for the Product Management Review and Executive S&OP steps.

The Demand Review is a crucial part of the S&OP process because it’s where different functions align on forecasts and demand plans, and identify any challenges in meeting demand, or any opportunities to be exploited. The aims of this process step are simple enough, but all too often the Demand Review fails in these goals by focusing too much on historical performance and reporting instead of looking forward. Here I reveal the 4 cornerstones of an effective Demand Review that drive focus on what really matters to the business, including understanding what factors are impacting demand both now and in the near future and, most importantly, understanding the gap between the demand plan and financial plans.