DSI as tactical process, 16
lack of alignment with sales/marketing, 17
plan-driven forecasting, 14
accountability, 27
functional integration, 181-183
measuring, 144
accuracy. See MAPE (Mean Absolute Percent Error)
AOP (Annual Operating Plan), 224
gaps between forecast and AOP, 226-228
underlying assumptions, 225-226
approach
forecasting hierarchy, 194-196
forecasting point of view, 189-192
forecasting true demand, 192-194
incorporation of qualitative input, 197-199
available data, nature of, 45-47
averages
bias
in jury of executive opinion, 105-106
Boeing Corporation
qualitative forecasting, 95-96
bottom-up forecasting, 121-122, 190-191
Brake Parts, Inc., 233
business climate, 225
compared to demand forecasting, 33, 183-184
demand plans, 10
financial plans, 11
operational plans, 10
calculating
MAPE (Mean Absolute Percent Error), 155-157
unweighted MAPE, 160
weighted aggregate MAPE, 160-163
return on shareholder value, 165-168
causality versus correlation, 90
forecasting form, 38
forecasting hierarchy, 42
forecasting level, 36
competitive activity, 226
complex information and qualitative forecasting, 98-99
demand review, 22
portfolio and product review, 21-22
continuous process review, measuring, 144
correlation versus causality, 90
cost of qualitative forecasting, 100
cross-functional participation, measuring, 144
customer base, nature of, 44-45
customer gap, 228
customer-generated forecasts, 124-133
choosing customers to work with, 129-130
customer collaboration, 130-131
distribution and retail customers, 125-126
incorporating into process, 132
OEM customers, 125
project-based customers, 125
data organization, 50
decision orientation, measuring, 144
demand, 35
demand forecasting. See also demand review
approach
forecasting hierarchy, 194-196
forecasting point of view, 189-192
forecasting true demand, 192-194
incorporation of qualitative input, 197-199
bottom-up forecasting, 121-122, 190-191
compared to business planning, 33, 183-184
compared to goal setting, 34
compared to sales forecasting, 34-35
customer-generated forecasts, 124-133
choosing customers to work with, 129-130
customer collaboration, 130-131
distribution and retail customers, 125-126
incorporating into process, 132
OEM customers, 125
project-based customers, 125
factors influencing, 44
final forecasts, constructing, 133-137
forecasting hierarchy, 41-43, 194-196
forecasting interval, 38
forecasting level, 36
forecasting needs of different functions, 40
forecasting systems, 49-52, 201
access to performance measurement reports, 205-207
system infrastructure, 209
functional integration, 175
forecasting versus planning, 183-184
initial forecast, preparing, 220-223
market intelligence
acquiring and documenting, 123-124
from customer-generated forecasts, 124-133
final forecasts, constructing, 133-137
micro versus macro intelligence, 121-122
performance measurement
how performance is measured, 211-213
how performance is rewarded, 213-214
improving, 215
MAPE (Mean Absolute Percent Error), 154-164, 212-213
outcome metrics, 142-143, 165-168
percent error, 213
percent error calculation, 145-149
return on shareholder value, 165-168
“phase-in/phase-out” forecasting, 48
plan-driven forecasting, 14, 183
product family level forecasting, 81
qualitative forecasting
Hershey Foods example, 95
jury of executive opinion, 104-107
who does qualitative forecasting, 96-97
quantitative forecasting
stages of sophistication, 196-197
Seven Keys to Better Forecasting, 215-217
SKU-level forecasting, 81
demand plans, 10
demand review, 22
demand review meeting, 230-235
new product forecasting, 21
preparation of initial forecast, 220-223
demand review meeting, 230-235
demand-driven implementation, 18
Demand/Supply Integration. See DSI (Demand/Supply Integration)
Deming, Edwards, 139
discipline, 19
distribution customers, 125-126
documenting market intelligence, 123-124
Drucker, Peter, 139
DSI (Demand/Supply Integration). See also demand forecasting
aberrations
DSI as tactical process, 16
lack of alignment with sales/marketing, 17
plan-driven forecasting, 14
characteristics of successful implementation, 26-29
compared to S&OP (Sales and Operations Planning), 3-4
demand review, 22
portfolio and product review, 21-22
demand review
demand review meeting, 230-235
preparation of initial forecast, 220-223
measuring effectiveness of, 142-144
principles
demand-driven, 18
discipline, 19
requirements, 3
signs of ineffective integration, 5-6
error
MAPE (Mean Absolute Percent Error), 154-164, 212-213
unweighted MAPE, 160
weighted aggregate MAPE, 160-163
executive opinion, jury of, 104-107
failure to recognize patterns, 100-101
final forecasts, constructing, 133-137
finance, forecasting needs of, 40
financial plans, 11
focus and salesforce composites, 115-116
forecasting. See demand forecasting
forecasting hierarchy, 41-43, 194-196
forecasting interval, 38
forecasting level, 36
forecasting point of view, 189-192
forecasting systems, 49-52, 201
access to performance measurement reports, 205-207
system infrastructure, 209
forecasting/DSI champion, 181
functional integration, 175
forecasting versus planning, 183-184
game playing in qualitative forecasting, 101-102, 113
goal setting, compared to demand forecasting, 34, 224
groupthink, reducing effects of, 108
Hershey Foods
qualitative forecasting, 95
hierarchy (forecasting), 41-43, 194-196
Honeywell Corporation, 49
improvement, measuring, 144
functional integration, 187-188
performance measurement, 215
Seven Keys to Better Forecasting, 215-217
incorporating customer-generated forecasts, 132
industry growth, 226
ineffective demand/supply integration, signs of, 5-6
information limitations, 99-100
infrastructure of forecasting systems, 209
initial forecast, preparation of, 220-223
interval, 38
islands of analysis, 207-208, 216
judgmental forecasting. See qualitative forecasting
jury of executive opinion, 104-107
key performance indicators (KPIs), 55-56
leadership
accountability, 27
importance in DSI implementation, 27
jury of executive opinion, 104-107
linear regression, 85
macro market intelligence, 121-122
managing forecasting process, 44
MAPE (Mean Absolute Percent Error), 154-164, 212-213
unweighted MAPE, 160
weighted aggregate MAPE, 160-163
market intelligence
acquiring and documenting, 123-124
from customer-generated forecasts, 124-133
final forecasts, constructing, 133-137
micro versus macro intelligence, 121-122
market share, 225
marketing
forecasting needs, 40
lack of alignment with, 17
qualitative forecasting, 96-97
Maxtor, 48
Mean Absolute Percent Error. See MAPE (Mean Absolute Percent Error)
measuring performance
how performance is measured, 211-213
how performance is rewarded, 213-214
improving, 215
MAPE (Mean Absolute Percent Error), 154-164, 212-213
unweighted MAPE, 160
weighted aggregate MAPE, 160-163
outcome metrics, 142-143, 165-168
return on shareholder value, 165-168
meetings, demand review meeting, 230-235
Mentzer, Tom, xii-xiv, 139, 165, 171
metrics
outcome metrics, 142-143, 165-168
micro market intelligence, 121-122
multi-level participation, measuring, 144
multiple regression, 85
new product forecasting, 21
New Product Introduction (NPI) timing, 229
NPI (New Product Introduction), 229
OEM customers, 125
operational plans, 10
organization, functional integration, 178-181
outcome metrics, 142-143, 165-168
participation, measuring, 144
PE. See percent error
performance measurement
how performance is measured, 211-213
how performance is rewarded, 213-214
improving, 215
MAPE (Mean Absolute Percent Error), 154-164, 212-213
unweighted MAPE, 160
weighted aggregate MAPE, 160-163
outcome metrics, 142-143, 165-168
return on shareholder value, 165-168
“phase-in/phase-out” forecasting, 48
pick-best functionality, 196-197
plan-driven forecasting, 14, 106, 183
plans. See business planning
portfolio and product review, 21-22
preparation of initial forecast, 220-223
pricing actions, 229
processes, functional integration, 176-178
product (SKU) rationalization, 21-22
product family level forecasting, 81
project-based customers, 125
promotional activity, 228
Hershey Foods example, 95
jury of executive opinion, 104-107
cost issues, 100
failure to recognize patterns, 100-101
information limitations, 99-100
large amounts of complex information, 98-99
summary, 103
who does qualitative forecasting, 96-97
quantitative forecasting
advantages of, 103
incorporation of qualitative input, 197-199
stages of sophistication, 196-197
time series analysis
regional gap, 227
requirements of DSI, 3
return on shareholder value, 165-168
reviews
demand review, 22
preparation of initial forecast, 220-223
portfolio and product review, 21-22
rewarding performance, 213-214
risks of customer-generated forecasts, 126-129
S&OP (Sales and Operations Planning), 3-4
sales, lack of alignment with, 17
Sales and Operations Planning (S&OP), 3-4
sales department
forecasting needs, 40
qualitative forecasting, 96-97
Sales Forecasting Management: A Demand Management Approach (Metzner and Moon), 145
seasonality, 62
senior executives, qualitative forecasting, 96-97
Seven Keys to Better Forecasting, 215-217
shareholder value, calculating return on, 165-168
simple regression, 85
simplicity and salesforce composites, 113-114
SKU-level forecasting, 81
sourcing, forecasting needs of, 40
stages of sophistication
approach
forecasting hierarchy, 194-196
forecasting point of view, 189-192
forecasting true demand, 192-194
incorporation of qualitative input, 197-199
explained, 174
forecasting systems, 201
access to performance measurement reports, 205-207
system infrastructure, 209
functional integration, 175
forecasting versus planning, 183-184
performance measurement
how performance is measured, 211-213
how performance is rewarded, 213-214
improving, 215
Seven Keys to Better Forecasting, 215-217
statistical forecasting, 49-50, 53-55, 196-197
incorporation of qualitative input, 197-199
time series analysis
strategic focus, measuring, 144
strong executive support, 177-178
subjective forecasting. See qualitative forecasting
successful DSI implementations, characteristics of, 26-29
supply chain
demand-driven supply chains, 18
DSI (Demand/Supply Integration) across, 11-13
access to performance measurement reports, 205-207
system infrastructure, 209
tactical process, DSI as, 16
time series analysis
training, functional integration, 185-187
trends, 61
unweighted MAPE (Mean Absolute Percent Error), 160
volume gap, 227
weighted aggregate MAPE (Mean Absolute Percent Error), 160-163
weighted MAPE (Mean Absolute Percent Error), 159-160
wide-spread training, measuring, 144
world-class performance
approach
forecasting hierarchy, 194-196
forecasting point of view, 189-192
forecasting true demand, 192-194
incorporation of qualitative input, 197-199
forecasting systems, 201
access to performance measurement reports, 205-207
system infrastructure, 209
functional integration, 175
forecasting versus planning, 183-184
performance measurement
how performance is measured, 211-213
how performance is rewarded, 213-214
improving, 215