Best Practices In Forecasting
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Demand Forecasting presentation - expressing the basics of how to approach it as a Product Marketing Manager, Product Manager, or Marketing Manager. Presented at ProductCamp 2011 in Toronto.
Best Practices In Forecasting
- 1. Best Practices in Demand ForecastingCHARLES DIMOVCDIMOV@HOTMAIL.COMOR FIND ME ON lINKEDiN
- 2. Operate Efficiently & EffectivelyCompanies must understand Supply & Demand constraintsAccurate ForecastsPrepare for resource needsPrepare for structural evolutionInvest right amount of Capital at right timeWin in Market!Why?
- 3. OverSupply:Depreciating resourcesObsolescenceOverstaffingExcess InventoryAffects Price Drives Promo addictionErodes Product ValueErodes Brand ValueWrong ForecastCOGS Cash Flow TiedROA GM Contribution Margin Acid Test Score Viability of Company
- 4. UnderSupply:Product ShortagesLost SalesPrice Brand Promise Bad PRCustomer Confidence Months to recover in Supply ChainWrong ForecastMarket Share Lost Revenue Opp.Earnings P/E (not optimal)Lost Market PositionCompetitor Wins
- 5. To Avoid This ForecastImage by: Iam Wahid (16Jul2009)
- 7. Whenever possible use HISTORICAL DATAFor NPI use closest HISTORICAL DATAStudy History or be doomed to repeat it Brother LomanLavigneFirst PrincipleTime variability, and scale
- 8. Analysis: SeasonalityTrend1 Economic CycleCycle1 YearSeasonality
- 9. Excel / Systat / SPSS / SAS / MiniTabDescriptive Statistics to show boundariesAnalysis: StatisticsBANOTE: Watch the STD Deviations
- 10. Many S/W Tools Expert System chosen modelsLowest MAD (Mean Absolute Deviation)Export to ExcelCan be a Dead Simple ProcessAnalysis: Forecast Tools
- 11. Forecast Pro$1,295 - $8,995 USwww.forecastpro.comVanguardwww.vanguardsw.comDemandWorksSmoothie$500 - $6,000 USwww.demandworks.comSAS www.sas.comAnalysis: Forecast Tools
- 12. CrowdSourcing: under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them. p.xi Introduction, Wisdom of Crowds, James Surowiecki.Analysis: CrowdSourcing???
- 13. No one model will be accurate every timeForecasting is inexact Dark-Art / ScienceProvides General Guidance on direction and magnitudeTriangulate-Seasonality Est.-Forecast Tool Est.X-Channel Est.-Sales Funnel-Supply Constraint-CrowdSource
- 14. Product / Marketing Mgr Smarts / HeuristicsEyeballMajor DM + Ad Campaign+ Promotional OfferVersion 2 Pre-Anouncewill stall sales B4 general availability
- 15. Product / Marketing MgrsPricing Model changesPromotional OffersMarketing CampaignsDiscounting changesBrand effectsBankruptcies / New entrantsCompetitive AnalysisMarket ConditionsMajor EventsReduced DefectsEyeballNew Channel PartnersDistribution ModelDisruptive Technology ChgMarket Preference shiftManufacturing capacityMarket Share expectationsGlobal EventsEconomic Cycle effectsInventory ReturnsOther Factors
- 16. Every Quarter check Forecasts vs ActualsFocus = biggest deviationTweak ModelDo it again!Feedback Loop
- 18. Books: Not found a practical book Websites: www.ibf.org (not s/w specific) (discussion forum)Article: TPMA Focus 3Q11More on Forecasting