Index
A
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
B
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
C
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
D
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
E
error
MAPE (Mean Absolute Percent Error), 154-164, 212-213
unweighted MAPE, 160
weighted aggregate MAPE, 160-163
executive opinion, jury of, 104-107
F
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
G
game playing in qualitative forecasting, 101-102, 113
goal setting, compared to demand forecasting, 34, 224
groupthink, reducing effects of, 108
H
Hershey Foods
qualitative forecasting, 95
hierarchy (forecasting), 41-43, 194-196
Honeywell Corporation, 49
I
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
J-K
judgmental forecasting. See qualitative forecasting
jury of executive opinion, 104-107
key performance indicators (KPIs), 55-56
L
leadership
accountability, 27
importance in DSI implementation, 27
jury of executive opinion, 104-107
linear regression, 85
M
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
N
new product forecasting, 21
New Product Introduction (NPI) timing, 229
NPI (New Product Introduction), 229
O
OEM customers, 125
operational plans, 10
organization, functional integration, 178-181
outcome metrics, 142-143, 165-168
P
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
Q
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
R
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
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
T
tactical process, DSI as, 16
time series analysis
training, functional integration, 185-187
trends, 61
U-V
unweighted MAPE (Mean Absolute Percent Error), 160
volume gap, 227
W-X-Y-Z
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