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Improving Forecast Value Added
Posted on Wednesday, 15 April 2015


Forecast accuracy is a common and helpful overall measure. However, it only provides the degree of closeness of your forecast to your actual sales. Forecast Value Added adds visibility into individual sources that contributed to the forecast. With Forecast Value Added, you can understand the impact of each input on the forecast, and whether or not they improved it.

“In essence, what we’re doing is starting with a ‘naïve’ forecast”, says Eric Wilson, Director of Demand Planning and S&OP (Sales and Operations Planning) at Tempur Sealy International, the world’s largest bedding provider. “And every time we touch that forecast or process, we measure if we’ve improved or detracted from the baseline forecast. You’re determining how each step impacts the forecasting of the product.”

To figure out if inputs were improving their demand forecasts, Tempur Sealy turned to Forecast Value Added. The inputs include things like promotion planning, marketing, sales, POS real-time data, and econometric modeling. Their goal was to determine which combination of inputs results in the soundest forecast.

Improving Forecast Value Added can be facilitated by tools that collect and analyze relevant data and integrate it into the planning process. ToolsGroup’s Demand Collaboration Hub is a web-based consensus forecasting platform that brings together demand and forecast data from multiple sources. It supports external sources such as partners, retailers, distributors, and suppliers and internal contributors like marketing and sales. Making changes to the baseline forecast can fine-tune market knowledge for smarter planning. Reduced forecast error and variability via Forecast Value Added can have a big impact on inventory and costs for an organization.

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ToolsGroup is present in the Philippines via technology consulting company and ToolsGroup partner MISNet. For inquiries, call 621-9202 and ask for Yanna or email marketing@misnet.com.ph.

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