As we discussed last week, the forecasting process is often contaminated by individuals whose input makes the forecast worse. Sometimes this is intentional. For example, if I'm tired of hearing customers complain about out-of-stocks on retail shelves, I'll try to drive up the forecast so that more inventory will be carried.

We've seen how forecast value added (FVA) analysis can be used to identify those individuals or activities that make the forecast worse. But what happens when those making the forecast worse are in executive management?

Many organizations have a final step of “executive approval” for all forecasts. Those with approval power may not want to give it up. However, if you have the data and analysis to show that this final step is making the forecast worse, you need to bring it to management’s attention.

It may be best to present such findings privately, rather than spring it on your upper management in a public forum. Be courteous and tactful when presenting the information -- it is meant to help improve company performance, not to ambush and publicly embarrass someone. (Unless that person really deserves it, and you are prepared for unemployment.)

Remember, executive management probably thinks they are doing the right thing by overseeing the forecasting process and approving the numbers. But if you can demonstrate that this final approval process is simply a waste of effort and is actually detrimental to company performance, they might be willing to step aside – or at least be more willing to trust the forecasts that the forecasting professionals have delivered to them.