Executive Briefings

How Demand Sensing Is Changing the Role of the Forecaster

Rick Davis, vice president of business planning with Kellogg USA, makes the case for applying sophisticated demand-sensing capabilities to the planning and forecasting process.

The role of the forecaster is evolving, as companies gain access to greater amounts of valuable data. New information systems are a major factor behind the change.

"Technology allows us to look at new signals differently," says Davis. "It moves us away from the typical forecaster, who's taking a position against sometimes incomplete data, to [being] more of an analyst of what's relevant - the demand stream he's trying to protect."

Demand sensing is the discipline of determining what's going on right now. It trumps reliance on past practice, wherein companies made decisions based solely on where they thought the business was heading. Today, says Davis, they have access to daily data from key retailers on specific products. As a result, "you're always starting from a better position of knowledge than in the past."

Gaining that level of intelligence is only the beginning. The planner needs to be able to respond to actual market conditions. A flexible supply chain allows companies to determine what has changed since the last forecast, where product needs to be now, and how to get it there.

Companies should not expect to zero in on one number in the planning process that can serve all functions within the supply chain. "I believe that's a bit of a myth," says Davis. The real goal should be alignment among departments. "It's important to have started from the same spot," he adds. "It's more of a snapshot in time."

Planners need to build in room for change based on actual conditions, without throwing out the plan altogether. "Any change that we make to the forecast should be because we have new news, or better information," Davis says. "It goes back to the plan being grounded in fact, logic and reality."

To view the video in its entirety, click here


Keywords: supply chain, supply chain management, supply chain planning, supply chain forecasting, supply management, retail supply chain

The role of the forecaster is evolving, as companies gain access to greater amounts of valuable data. New information systems are a major factor behind the change.

"Technology allows us to look at new signals differently," says Davis. "It moves us away from the typical forecaster, who's taking a position against sometimes incomplete data, to [being] more of an analyst of what's relevant - the demand stream he's trying to protect."

Demand sensing is the discipline of determining what's going on right now. It trumps reliance on past practice, wherein companies made decisions based solely on where they thought the business was heading. Today, says Davis, they have access to daily data from key retailers on specific products. As a result, "you're always starting from a better position of knowledge than in the past."

Gaining that level of intelligence is only the beginning. The planner needs to be able to respond to actual market conditions. A flexible supply chain allows companies to determine what has changed since the last forecast, where product needs to be now, and how to get it there.

Companies should not expect to zero in on one number in the planning process that can serve all functions within the supply chain. "I believe that's a bit of a myth," says Davis. The real goal should be alignment among departments. "It's important to have started from the same spot," he adds. "It's more of a snapshot in time."

Planners need to build in room for change based on actual conditions, without throwing out the plan altogether. "Any change that we make to the forecast should be because we have new news, or better information," Davis says. "It goes back to the plan being grounded in fact, logic and reality."

To view the video in its entirety, click here


Keywords: supply chain, supply chain management, supply chain planning, supply chain forecasting, supply management, retail supply chain