Getting Your Forecasting and Planning Fundamentals Right: A Case Study
In our previous issue (Winter 2011), Alec Finney and Martin Joseph advised readers on how to fine-tune a company’s forecasting and planning fundamentals. They recommended a three-step audit to focus on: • How good do we think we are? • In reality, how good are we? • How good should we strive to become? This new article illustrates how the audit process plays out within an organization. It provides two accounts based on a case study of a global biotechnology specialty-care group based in Paris, France. Alec and Martin’s story presents the auditors’ viewpoint. It describes the way the audit and subsequent analysis probed beneath the surface to reveal not only consensus views but polarized and outlying views. Hannah’s story is the internal view at the company, describing the challenges faced, how the interviews were received, and how the recommendations were presented to management. She concludes with an assessment of the benefits that accrued. Copyright International Institute of Forecasters, 2011
Solving the problems of new product forecasting
An important consideration in solving the problems of new product forecasting entails distinguishing new product forecasting from the process of forecasting existing products. Particular differences between the two can be identified across the dimensions of data, analytics, forecast, plan, and measurement. For example, new product forecasting features little to no data with which to begin the process, whereas data are available and accessible in forecasting existing products. The minimal data situation requires a qualitative approach that lays out assumptions to provide transparency; in contrast, quantitative techniques are predominantly used when forecasting existing products. Different assumptions help construct a range of new product forecast outcomes on which company contingencies can be planned versus a singular point forecast for an existing product. And the measure of forecast accuracy, which is a common metric in forecasting existing products, must give way to meaningfulness so that the new product forecast is actionable. Recognizing new product forecasting as a cross-functional, company-wide process helps resolve the problems of new product forecasting. While incapable of remedying all problems, a properly understood and organized new product forecasting effort can help the company better prepare, execute, and support a new product launch, affording a greater propensity to achieve new product success.
Can We Obtain Valid Benchmarks from Published Surveys of Forecast Accuracy
Organizations often seek benchmarks to judge the success of their forecasts. Reliable benchmarks would allow the company or agency to see if it has improved upon industry standards and to evaluate whether investment of additional resources in forecasting would be money well spent. But can the existing benchmark surveys be trusted? "No," says Stephan Kolassa, who has analyzed the surveys and found them seriously deficient. In this article Stephan explains the many problems that plague benchmark surveys and advises that companies should redirect their search from external to internal benchmarks since the latter provide a better representation of the processes and targets the company has in place. Copyright International Institute of Forecasters, 2008