12 Forecast value added
This chapter will show you how to improve your forecasting accuracy (efficacy) and reduce your teams’ workload (improving efficiency) using the Forecast Value Added Framework. Two birds, one stone.
As we will discuss in the conclusion, Forecast Value Added (FVA) doesn’t require massive investment. Its ROI will likely outshine any other demand planning improvement projects. Implementing it should be a priority and the cornerstone of your demand planning improvement journey.
To present this framework, let’s imagine the following scenario: You are managing the demand forecasting process of your supply chain. The supply chain is global, with products sold and distributed globally. The first step of your demand planning process is to use forecasting software, to create a baseline forecast.[1] Then multiple teams provide inputs: First your demand planning team, then salespeople, and finally, the process concludes with a consensus meeting, where the final forecast number is agreed upon. Unfortunately, as we will see in Chapter 15, this final consensus meeting can be more about promoting personal agendas and influence than about forecast future demand in an unbiased way.
Figure 12.1 Your demand forecasting process.
