Fresh from chairing the Foresight Practitioner Conference on “Worst Practices in Business Forecasting,” hosted two weeks ago at the Institute for Advanced Analytics at North Carolina State University, Foresight editor-in-chief Len Tashman previews the Fall 2016 issue.
Preview of the Fall 2016 issue of Foresight
In the provocative article, “The Impact of Strategy on Supply Chain and Forecasting,” Bram Desmet explores how a company’s market strategy affects its supply chain targets and forecasting methodology. The author introduces the concept of the supply chain triangle to illustrate the balancing act a company must perform to achieve the cost, service, and inventory mix that maximizes its return on capital employed. He then shows how the company’s strategic choice, be it operational excellence, product leadership, or customer intimacy, influences the position it seeks on the supply chain triangle and, in particular, its inventory targets.
In 2011, Shell Lubricants established a Central Forecasting Team (CFT) to deal with unacceptable forecasting performance. Alex Hancock worked with this team for four years, and the group eventually engineered a turnaround effort that identified and reformed practices blamed for much organizational pain. In “Forecast Process Improvement at Shell Lubricants,” Alex reflects on the fits and starts at the CFT and reveals key lessons learned for reforming the forecasting function.
We know that Sales and Operations Planning (S&OP) is a cross-functional process, bringing a company’s demand- and supply-side people together to reach consensus on the demand forecasts and operating assumptions. The participants typically engage in a series of meetings across each month, and the process outcome is determined by how effectively the individuals collaborate within the team. As Scott Ambrose writes in “Achieving S&OP Success: How Principles of Team Effectiveness Can Help,” principles of team effectiveness have been widely studied, but not applied previously to S&OP. Scott’s article examines how recognition and implementation of these principles can improve S&OP collaboration and performance.
In this fascinating discussion, “Mission-Based Forecasting: Demand Forecasting for Military Operations,” military veteran and OR expert Greg Parlier examines the application of demand forecasting and inventory management in support of military operations. The commercial “point of sale” becomes the “point of readiness generation” for the military. And customer- demand forecasting becomes mission-based forecasting. Greg highlights problems that have inhibited the supply chain’s ability to achieve mission readiness. Among the most serious is the absence of historical data on demand and consequent inability to implement effective demand forecasting and planning procedures. It is encouraging that the military has been learning important supply-chain lessons from the business world’s application of OR techniques.
“We should be making today what was sold yesterday, and shipping it tomorrow”— this is Joe Roy’s call to manufacturers and distributors of products in his article, “Sales Forecasts for the Consumer Chain: Are We Kidding Ourselves?” Joe argues that rapid response to changes in consumer demand should supersede the traditional supply-chain goal of establishing inventory targets based on sales forecasts. Furthermore, he states that the problem with sales forecasts is that they are typically for longer periods than required and that they serve as a crutch to manufacturing’s lack of responsiveness to demand. He advocates that, in a “consumer chain,” time means next day!
Numerous forecasting support systems (FSSs) have been developed through the years to help companies select and implement forecasting procedures and to support managerial decisions. While the majority of these systems are off-the-shelf, Evangelos Spiliotis, Achilleas Raptis, and Vassilios Assimakopoulos argue that such generic systems will not always be up to the task. As they assert in “Off-the-Shelf vs. Customized Forecasting Support Systems,” problems can arise due to lack of ustomizability, inadequate Web-based architecture, and poor user interfaces.
The authors have developed a Web-based FSS specifically to forecast water consumption (in the province of Attica, Greece). In doing so, they took as a springboard many of the proposals for the design of an FSS presented in the special feature on FSS in Foresight’s Fall 2015 issue.
Introducing New Associate Editor Chris Gray
With our 43rd issue, Foresight welcomes new Associate Editor Chris Gray.
Chris is President of Gray Research, a founder of Partners for Excellence and a founder of Worldwide Excellence Partners (WWXP), a global confederation of independent experts devoted to sharing knowledge and experiences on proven, profitable management processes. He has authored or coauthored six books, written dozens of articles and software evaluations, and run numerous seminars and workshops covering S&OP, demand planning, MRP, enterprise software, lean manufacturing and other supply chain issues. Chris is a past President of the North Shore chapter of APICS and was certified as a Fellow (CFPIM) by APICS in 1980.
His three books in the 1980s, including MRP II Standard System, A Handbook for Manufacturing Software Survival (which he coauthored with Darryl Landvater), have defined the standards for resource planning software. He also developed and taught the MRP II Software Survival Course, a class covering software evaluation and selection, software trends, and the role of systems people in implementing effective systems.
In 2006, Chris and fellow Partner of Excellence John Dougherty published Sales & Operations Planning—Best Practices, a book based on their examination of planning practices in 13 companies around the world that became a highly influential text on S&OP. In one of two reviews in Foresight’s Winter 2009 issue, John Mello wrote, “Showing how S&OP really has made a difference in the corporate world is what sets this book apart from those that merely describe how S&OP works, or is supposed to work.”
Chris joins longtime Associate Editor Stephan Kolassa as the main guardians of quality assurance in Foresight publications.
Stephan's day job at SAP AG in Switzerland is Research Expert, responsible for statistical and time series forecasting of SKU/store level data in the retail sector, as well as price optimization, assortment planning, and replenishment. Stephan is a member and current Secretary of the Board of Directors of the International Institute of Forecasters, publisher of Foresight. He is a prolific contributor of methodological research to a range of scholarly journals.
In his spare time, he has authored or coauthored nearly a dozen articles and commentaries for Foresight covering forecast accuracy metrics, benchmarking, simplicity in modeling, and forecasting support systems. As Associate Editor he has reviewed and edited more than 50 invited and submitted articles.
Stephan and coauthor Enno Siemsen’s new book, Demand Forecasting for Managers, has just been published by Business Expert Press and will be reviewed in Foresight’s Winter 2017 issue. The book is intended as an introduction to forecasting for the non-expert, such as a manager overseeing a forecasting group or an MBA student.