Forecast Value Added (FVA) is a metric for comparing the performance of your organization’s forecasting process to “doing nothing” and using a naïve model to generate your forecasts. The idea is, if all the resources and effort we put into forecasting are not providing forecasts that are better than using a simple model, then why are we bothering? Why are we spending time and money to get worse results?
FVA analysis has been adopted by many organizations to track their forecasting process performance. This purpose is to identify process steps and participants that are “adding value” by making the forecast better, and to eliminate those steps and participants that are having no benefit or are just making the forecast worse. As S&OP thought leader Tom Wallace has suggested, you can think of FVA as the “lean approach” applied to forecasting.
At the Analytics2013 conference in Orlando (October 20-22), there are two opportunities to learn more about why companies are using FVA, and how to go about doing it at your own organization.
“Forecast Value Added Analysis” (1:00-5:00 p.m. on Sunday, October 20)
This half-day pre-conference workshop takes you step-by-step through data collection, analysis, and reporting of FVA results. Learn how to:
- map your forecasting process
- gather, organize, and store required data
- determine the volatility and forecastability of your demand patterns
- visualize the data
- create the "comet chart" relating forecast accuracy to volatility
- analyze the data using simple methods from statistical process control
- identify worst practices and other non-value adding activities
- report FVA results
- communicate results to management
- eliminate wasted efforts and streamline your forecasting process
- set reasonable forecasting performance objectives and expectations.
“FVA: A Reality Check on Forecasting Practices” (3:00-4:00 p.m. on Monday, October 21)
This one-hour session covers the basics tenets of FVA, providing examples of the methods and reports, and how to get started.
Please join us at Analytics2013, and at one (or both) of these FVA learning opportunities.
