Business Forecasting

CHAPTER 5Forecasting Process: Communication, Accountability, and S&OP

A focus on modeling alone does not solve the business forecasting problem. In fact, the quality of the “statistical forecast” (i.e., the forecast generated by the computer model) can play a relatively unimportant role when it is subject to management overrides. Even the best state of the art modeling is of little consequence if management ultimately adjusts the forecast to whatever they please.

This chapter explores many of the issues and considerations relating to the forecasting process. It begins with guidance from Steve Morlidge's book Present Sense, where he implores forecasters to communicate like reporters, providing the facts and uncertainties, rather than try to wrap inherently uncertain forecasts into tidy unambiguous stories.

Further issues with communication and accountability are covered in the next several articles, including ways to explain the forecast to executives and provide insights from the data, and how to share the bad news of a downturn in the forecast. Sales and Operations Planning (S&OP) remains an important topic, and Patrick Bower warns of change management pitfalls when trying to implement the S&OP process.

The chapter ends with two articles calling for a rethinking of the business forecasting process. John Hellriegel shows how principles from lean manufacturing can be applied to help streamline a forecasting process. And Michael Gilliland argues for a change in the paradigm – ...