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Hello and welcome
to today's session,
understanding the
forecasting process.
My name is Misty Eldridge,
and I've been in the planning and
forecasting arena for well over 20 years,
in a lot of different
companies of different sizes.
Today, we're going
to take a look at
the elements that go into
an end-to-end structured
forecasting process,
from data to collaboration
and consensus and
things to consider when
presenting the forecast.
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There's a lot of things
that we need to measure in
our businesses and
how we perform.
Forecast measures are just as
important as anything else.
One of the things or stories
I like to tell people is
when you think about the
measures that you use,
how you use them, and
what you're grabbing can
really tell a difference in the
story you're trying to tell.
For example, I worked
for a company where
we were measuring service level.
I get it, it's not necessarily
a straight-up forecast,
but it illustrates
this point very well.
In this service level measure,
we were just doing
a simple shipment divided
by ordered quantity,
pulling it out of a major ERP,
pulling the fields
that said shipped and
fields that said
ordered or booked.
The problem we were
getting is that
we weren't really
measuring fill rates.
There weren't any on-time
considerations as part of this,
but we still weren't
measuring fill rates.
What happened is that
we were measuring actually
inventory accuracy.
Let me tell you how
that came about.
It was considered acceptable on
the morning of the shipment to
call customer service and change
the quantity on the order to
the booked quantity,
to the amount showing as
on hand in inventory.
When shipping would
go out and pull
the inventory to ship
on the truck that day,
they would then find
something different,
and so then they would
ship that amount.
For example, hypothetically,
the customer ordered 200 pieces,
the morning after, we had
100 pieces of inventory.
We then call
customer service and
we would change the quantity
on the order to 100 pieces.
We would go to
ship the order and
we could only find 98 pieces.
Then we would report that
we had a 98% fill rate on
this order when in reality,
we only had a 98%
inventory accuracy because
our fill rate was below 50%.
You can imagine the issues that
would cause and
the perception of
our customer on how
we were not able to
perform and fulfill a
customer service level.
Just as important as
forecast accuracy,
grabbing the right fields,
the right formulas,
using the right measures
in the right way can
really impact the
communication of
how you're performing
in forecasts and
how you use those measures.
Forecasting is not a
precision business.
But the measures that we use,
they tell us a lot
about our business
and are extremely valuable.
