Many firms have no strategy for dealing with unforecastables and some even pretend that all items are statistically forecastable. Statistical tests need to be used to identify those articles which cannot be forecasted with conventional techniques, such as intermittent demand and demand with high variances.
For example, low volume and erratic demand may indicate that an item should not be offered in the current product configuration or at a particular location. A key question that must be answered in such cases is whether or not the product is profitable and to what extent? If the product is profitable, the corrective action may be to move the customer to a more popular package size or assign the customer to a different warehouse with more demand for the product.
So, I am not talking about Mickey Mouse and Donald Duck. I am talking about the upcoming IBF conference in October where you can learn the “magic” of better demand planning.
You will have many opportunities to learn how to improve both the quantitative and qualitative aspects of the Demand Planning process. I will be presenting on how the world’s leading chemical company, BASF, develops strategies to improve forecasting and better manage unforecastables. This includes methodologies for aligning product offerings with forecasting strategies and determining when conventional statistical tools are the right answer. Mine and other presentations will provide you with the knowledge and understanding to optimize the interaction of people-process-technology within the demand planning function.
If you are looking for a little “magic” to improve your demand planning & forecasting, join us in Orlando. You will hear about the use of volume & variance analysis to develop demand planning strategies and much more.
Of course, your comments here would be greatly appreciated. How do you handle unforecastables? It would be great to hear from you.
Alan L. Milliken
See ALAN L. MILLIKEN Speak at The IBF’S: