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Never Forecast What You Can Calculate



Become a Consumer Demand Driven Company, eliminate having to forecast shipments, and enjoy a 50% improvement in forecast accuracy

by Andre Martin

I read an article written by Robert F Byrne, CEO and co-founder of Terra Technologies, which specializes in demand sensing solutions to improve supply chain performance. The article is titled ‘Forecasting Performance for North American Consumer Products” and was published in the Journal of Business Forecasting in the fall of 2012.

Procter & Gamble, Unilever, Kraft Foods, Kimberly Clark, General Mills, Kellogg, ConAgra, and Campbell Soup are referenced in the article.

As I read this article, several things attracted my attention. The first was the following statement.

“Using lag for calculating forecast error stems from a time when forecasts were only available in weekly or monthly buckets. This all changes when the Demand Sensing technique is used because daily forecasts are available. Leaders who have embraced this technique have
all experienced increased supply chain performance and direct benefits in inventory management. This is part of the maturity process in transforming organizations to become demand driven.”

I said to myself, this is going to be really good; there is mention of generating daily forecasts as well as becoming demand driven. That is the world I live in and have lived in for several years.


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