Journal of Business Forecasting Articles Issues

While S&OP/IBP are effective in managing operational uncertainty and risk, there are some risk factors that are not captured in these processes. Exogenous risk takes the form of technological, environmental, competitive, political, financial, demographic, economic, and other factors. These are the bigger picture, long-term forces that can present serious risk to a business, whether it be risk of falling market share or risk to the very existence of the business itself. In this article, I discuss how strategic and long-term planning leaders can better understand exogenous risk, and develop a practical cross-functional framework to actively mitigate it. I reveal how to develop risk hedging strategies with real-life examples taken from a software company replacing an established software solution and a restaurant chain embarking on an aggressive growth strategy.

Demand planning serves as a central hub supporting multiple functions in the business with reliable forecasts and insight. Collaboration with Sales, Finance, Operations and Supply is therefore key to the role. This willingness to engage, cooperate and support other functions, however, can easily devolve into supporting too many requests from outside functions with non-planning related tasks. In this article I outline how to maintain a healthy balance between supporting functions to work towards better planning without burdening Demand Planners with tasks outside their scope of work. With these tips borne form my own experience, you’ll be better placed to push back against unreasonable demands on your time and ensure sufficient focus on core planning activities.

Baby Boomers are living longer. This group of retirees—who are wealthier, healthier, and more educated than prior age cohorts—are creating a ‘Longevity Economy’ fueled by their retirement incomes and investments. There is currently a dearth of goods and services that future retirees will need as they decline in physical and mental acuity. Over the next few decades, significant new product innovation will be needed to meet their demands. In this article, a seniors’ demand model to help forecasters and planners tap into this formerly neglected age group is introduced.

Energy services companies like SLB face the same planning challenges as manufacturers and retailers in that demand must be forecasted and an appropriate supply response must be coordinated. To this end S&OP is the planning process of choice but, considering the unique nature of services businesses, it comes with an extra step. In this article I reveal how Energy companies are adapting S&OP to their unique needs to meet the complexity of resource planning inherent in the energy industry. Further, I discuss how SLB is combining S&OP with predictive analytics to provide much-needed digitalization that connects demand management to resource planning, resulting in an E2E planning process starting from the demand signal and ending with resource deployment.

Risk Management is a key component of operational and strategic planning, but often a formalized Risk Management framework is often left out of consensus planning processes like S&OP and IBP. In this article I discuss how to identify the risks and opportunities for a portfolio of products, using a Risk Register (or matrix) that leverages SWOT analysis and documents probabilities and impacts of individual scenarios on specific products or categories. This Risk Register can be easily incorporated into the S&OP process for greater understanding of scenarios and better planning responses.

A key goal of any company is to maintain safety stocks that balance the need to meet desired service levels with avoiding excess or obsolete inventory. To this end, safety stock calculations are employed. However, one calculation does not fit all scenarios. In this study I present two different methodologies and apply them to real life examples, examining a demand-based calculation and a consumption-based calculation with a comprehensive review of the outputs. Crucially, we examine the outputs in the context of the SKU behavior to better understand when to employ which methodology.

Unemployment continues to stay at historic low levels (3.80% in Aug) despite the slight increase from its July level of 3.50% and the Fed’s aggressive efforts to bring inflation (3.00% in June) back to pre- pandemic levels. Hence, Dr. Ray Perryman of the Perryman Group states that the economy has slowed modestly but remains remarkably resilient while inflation has continued to moderate. Similarly, Wells Fargo believes that despite the 525 bps of Fed rate hikes since March 2022, recent data indicate that the US Economy remains strong.

The planning community mourns the loss of one of its leading figures and most ardent champions. Alan Lee Milliken passed away on July 13 in Pensacola, FL. Alan was a loving husband to his wife of 46 years, Elizabeth, and a proud father to two sons, Roger and Mark. For the team at IBF, he was a much respected colleague, trainer and educator. He shared his knowledge at countless IBF conferences over the course of two decades and guided multiple businesses across the globe to planning maturity through IBF’s consulting programs.

Despite the hype, most companies are cautious about adopting AI-based techniques for their demand planning. This is because machine learning wasn’t developed specifically for demand forecasting, rather it is a broader discipline whose elements are being applied to demand forecasting—with varying results. In this article I reveal how uptake is hampered by the fact that machine learning was built for the digital world and not the real world that Planners live in, how ML outputs are difficult to apply to business decision making, and how the data requirements exceed what many companies can access. At the same time, despite these challenges, I make the case that implementing AI is a journey all Demand Planners should take.

How did you get started in supply chain and what attracted you to the field? I got started in supply chain a little bit by accident. Early in my career in Marketing, one of my responsibilities was to forecast the business for financial and operational planning. Little did I know then that I was going to have a 20+ year career in planning. Although I did not consider volume forecasting to be critical to Marketing, I learned that it combined my skills, education, and personality very well. I’m very detail oriented, analytical, communicative, and could turn on the extroverted personality when needed. All those are critical to success in supply chain planning, and I found it fulfilling, challenging, and rewarding.

Like manufacturing, B2C services requires robust demand planning but is rarely featured in the demand planning literature. The services sector faces its own challenges when forecasting and planning demand, particularly when it comes to new product launches and operating at scale. I intend for this article to highlight the unique challenges faced in services businesses revealing a case study of a new product roll out at a Dutch telecom provider, featuring common problems encountered in B2C planning. I discuss how existential problems were overcome by mapping the existing supply chain, executing supply chain redesign, simulating different demand scenarios, understanding constrained and unconstrained demand, and incorporating S&OP. Further, I highlight the differences between planning in manufacturing and services environments, and key principles for services planning.

I am currently in my first supply chain role at Actylis, a leading manufacturer and supplier of critical raw materials and performance ingredients serving the specialty chemical, life science, and agriculture industries. I started with the company in the midst of COVID and joined an environment that was actively seeking to mitigate the supply chain risks that it posed. I recently had a mentoring session with our Sr. Director of Supply Chain, Pat Bower, a supply chain veteran and long-standing contributor to this Journal. I took the opportunity to learn more about our company’s reshoring initiatives, how to approach risk mitigation, and the specific sourcing strategies being pursued. It was a revealing exchange that we both agreed could add value to companies looking to strengthen their own supply chains in light of increasing global uncertainty. The highlights of that conversation were documented and are provided below.—Zachary Fisher

There has been a raft of news reports regarding layoffs at major tech companies. Stock prices of these companies had, over the last decade, grown rapidly on the basis of revenue growth, with little regard to profitability and efficiencies. For example, many profited from the COVID-19 lockdowns and remote working but as the pandemic waned, they experienced an unanticipated revenue slowdown, especially in their Cloud divisions. Apparently, they were late in forecasting this slowdown. This column introduces JBF readers to the ‘Pot-of-Water’ forecasting and planning model that the tech companies might have used to forecast critical ‘inflection points’ sooner.

Product Lifecycle Management is a key value driver for any business, particularly Consumer Goods Companies and those that rely on product innovation to remain competitive. This article is designed to be a comprehensive guide to Product Lifecycle Management and to assist planning leaders in incorporating PLM into their existing S&OP/IBP processes. The individual process steps are covered, along with their subroutines, and when they need to happen and who needs to be involved. Crucially, I reveal how these elements facilitate decision making regarding continuing or discontinuing existing products and whether to see new product introductions through to launch, or to abort.

Demand Planners are currently in the unenviable position of managing demand amid a maelstrom of disruptive change. Technology, interest rates, and geopolitical conflict are combining to change buying behavior, often rendering time series models—that cannot capture emerging and changing external demand factors—redundant. At this present time, chief among these factors of change is rising interest rates. The increased cost of capital is impacting your customers’ ability to finance working capital and inventory, and in turn is impacting demand for your products. In this article, I reveal the ways the current interest rate environment is affecting demand and how traditional planning methods need to be adapted. I also provide an overview of how the cost of borrowing impacts business decisions, both within your four walls and without.