Ibf Mini Tutorial Webcast June 2009

IN ORDER TO IMPROVE THE QUALITY OF BUSINESS DECISIONS Improving Forecast Performance

Elements of Forecast Performance
Accurate
Timely
Internally Consistent
Realistic Assumptions
Risk Sensitive
Demonstrates Range of Outcomes
Accuracy
Forecasted Outcomes

Elements of Forecast Performance
Meets Diversity of User Needs
Reflects Business Segmentations Used in Management and Management Decisions
Incorporates Intelligence of Functional Groups
Reflects Expert Opinion & Judgment
Communicated Clearly and Concisely

ACCURACY IS IMPORTANT!
But is not the sole factor in improving forecasting performance

Measure, Track, and Evaluate Accuracy! 06/10/09

Forecast to Take Advantage of the Pattern of Error! 06/10/09 Mean Average Percent Error (MAPE) Source: IBF 2007 Survey

Employ Operational Metrics such as……..
Customer Satisfaction Ratings
Order Fill Rates
Order Fill Times
Customer Service Calls
Customer Service Response Times
Inventory Levels & Turns
Shipping Times
Space Utilization Rates
Production and Storage Capacity Levels

Use Ranges….. Not Just Point Estimates
Forecast Ranges
99% Confidence (3sd)
Accuracy Ranges

Use Simulation Scenarios
Gather Key Concerns of Business Team
Modulate Key Assumptions
Estimate Scenario Subjective Probabilities
Evaluate Business Issues of Alternative Outcomes
Focus on Extremes - Best Case and Worst Case Outcomes
Work with Management on Hedging and Business Action Strategies

QUESTIONS??

CSI-S&OP: Why S&OP fails A brief look some causes for failed S&OP processes

Diagnosis of S&OP?
Right definitions
Will help understand what it is
Will help drive the process
Reasonable expectations
Will help set the agenda
Will help drive accountability
Will help push for follow up
Right people
Not too many/not too few
Communication is critical
Right Data

“ Where does it hurt?”
How often is your S&OP?
Who schedules it?
How hard is it to move the meeting?
What if you can’t attend?

Symptoms
Lack of Upper Management Support
If it important to upper management it will viewed as important to the whole company
Sometimes decisions will be dramatic and need upper management support to carry through
Remedy
You need a sponsor from upper management who will “Champion” the process
Show some positive early results. Even though they may not be quantitative.
Begin engaging upper management in the process

Symptoms
Lack of Goals and Expectations
Set specific goals/takeaways from the meeting
Make goals reasonable and achievable
Involve everyone in the expectations
Remedy
Key Performance Metrics
Follow ups

Symptoms
Incorrect or Irrelevant Data
Balance between history and forecast (don’t be too “forward thinking”)
The correct forecast model
Dollars vs. units
Budget or Operating Plan
Remedy
Continue to review the relevance of the data
Update the data
Don’t be afraid to use new data

Symptoms
Lack of Communication
Make sure lower levels of management have clear direction of the decisions made in S&OP
Publish relevant data to those not in S&OP
Make sure all departments communicate the same message
Remedy
Have team member specifically in charge of getting communication into the right hands
Publish something that it quick and easy to read

Symptoms
Lack of Consensus/Agreement
Leave “politics” at the door
Look at the “Big Picture”
Don’t play the blame game
Remedy
Check baggage at the door
Build TEAMWORK
If possible, cross departmental work

Symptoms
Incorrect Focus
It involves the entire company.
Needs to have direction

Questions

August 24 & 25, 2009 www.ibf.org/0809.cfm

Ibf Mini Tutorial Webcast June 2009

by jtaf02 on Jun 04, 2009

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Ibf Mini Tutorial Webcast June 2009 — Presentation Transcript