Chapter 12: Forecast Requirements
No topic generates more controversy than forecasting. Production people think it is the answer to all their troubles, and sales people think it is crazy to expect any accuracy from this process. The result in some organizations, unfortunately, is that production or materials professionals do the company forecasting without the demand-side people involved, and the sales people just plug in dollar amounts for the budgeting process. As the saying goes, This is no way to run a railroad or a manufacturing organization!
Forecasting, as defined in Chapter 4, is a demand-side process and needs to belong to the demand-side experts. Unfortunately, perfection in accuracy is a dream. Moderate accuracy can be achieved, but to think that it will be sustainable without a lot of work is optimistic at best. The problem comes from companies that are using new services and trying new products. High-performance companies, by nature, are the most difficult to predict because of special causes introduced into the processes every day. These come from new markets, new products, and new services offered to entice customer loyalty and business. In this chapter, we will poke at the idea of how good the forecast needs to be. This is not an exact science, and markets and manufacturing processes can differ in many respects. Because of this, there will be no magic answer, but ideas and thought may help the process design of forecasting in your company.
WHO OWNS THE FORECAST?
In high-performance companies, the sales and/or marketing team owns...