7 Should we reconcile forecasts to align supply chains?
As we have discussed multiple times, supply chain management is about making decisions. As you orchestrate a supply chain, you want your teams to align their decisions. If marketing is preparing a product launch in Q2, you want your supply team to store enough inventory by the end of Q1.
To align teams along a supply chain, many advise using a single, shared forecast across all stakeholders (called a one number forecast). However, as we will discuss in this chapter, using different—but aligned!—forecasts (we call this one number mindset) might result in better decisions and more efficient forecasting processes.
7.1 Forecasting granularities requirements
In a supply chain, various teams and processes base their decisions on demand forecasts. As discussed in chapter 5, different stakeholders will have different requirements regarding forecasting horizon and material, geographical and temporal granularity (figure 7.1).18
Figure 7.1 Supply chain roles and forecasting granularities and horizons
As illustrated in figure 7.1, a logistic manager might use the forecast to decide which shops to ship goods to in the next few days. In contrast, a plant manager must plan production for the next few weeks. A strategist marketer will use the same forecast to assess what product needs to be renewed in the next six to nine months. Finally, a finance manager will plan cash-flow based on a revenue forecast for the following quarters.