Demand-Driven Forecasting: A Structured Approach to Forecasting, 2nd Edition

CHAPTER 11

Strategic Value Assessment: Assessing the Readiness of Your Demand Forecasting Process

The business landscape for many companies has changed dramatically over the past several years. Not only have companies endured a downturn in the economy, which put additional demands on customer service and revenue generation, but soaring costs for raw materials, energy, and transportation have put even more strain on profitability. Certainly improvements in sales and marketing programming, quality, and even cultural change can lead to improved competencies across the enterprise. However, from a process perspective, the ability to accurately predict demand in the face of increasing costs and lower sales can have a significant impact on profitability, as margins are squeezed and competition for sales become fierce.

The consensus based on surveys conducted jointly by the SAS Institute Inc. and Purdue University in November 2008 indicates that demand forecasting will be the number one priority for most manufacturers in 2009 and beyond.1 Although many companies consider demand forecasting as an important function within their organizations, many still are not addressing it through improvement in business process design. The problem stems from the lack of understanding of how to evaluate and create a viable road map that will lead to improvements in the demand forecasting process. In their eagerness to address this issue, many companies either hire several statisticians with PhDs or invest ...