Forecasting Process at Wyeth Ayerst Global Pharmaceuticals

Article excerpt

Q. Can you tell us something about your company, and the number of different products you produce?

A. Wyeth-Ayerst is the 9th largest Pharmaceutical Company in the world. In terms of revenue, Wyeth has roughly $12 billion in sales. I work in the ethical pharmaceutical division's global headquarters, Wyeth-Ayerst Global Pharmaceuticals, which works in conjunction with affiliate offices in many countries around the globe.

Q. Where does the forecasting function reside? How many people work in this function and what are their titles? Whom does this group report to?

A. We forecast sales at both global and country levels. At the country level, the sales forecasting function typically resides with the affiliate office marketing departments. Category, Product, or Brand Managers are responsible for developing the sales forecast. At the global level, the sales forecasting function resides with a recently formed group within Global Strategic Marketing (GSM), called Global Strategic Forecasting and Analysis (GSF&A). The Director of GSF&A reports to the AVP of Global Business Intelligence. There are Associate Directors and Forecasting Managers who report to the Director; Forecast Analysts report to the Managers.

Q. What is the background of people who work in the forecasting function?

A. At the country level, almost all are marketing people trained in brand management, but most have little formal training in forecast modeling or statistics. Consequently, a pharmaceutical sales forecasting training program has been recently launched to improve the technical forecasting skills of the marketers. At the global level, almost all of the management and analysts in GSF&A have a master degree in Economics, Operations Management, Business or Statistics. As a group, GSF&A members are well trained in econometrics, time series forecast modeling, probability and statistics, and new product forecasting.

Q. Can you describe in detail the forecasting process used at your company, and people who participate?

A. Corporate Management has recently launched a global effort to standardize forecasting processes, Consequently, this program now underway will enhance both Short Term Forecasting Process and Long Term Strategic Forecasting Process. Forecasting best practices will be applied. Corporate managers in conjunction with affiliate representation and outside consultants designed and developed both processes.

The Short Term Forecasting Process is focused on tactical forecasts for products that have already been launched and have sales history. The forecasting process is framed within the context of a formal monthly Sales and Operations Planning format. A cross functional team of managers and analysts from the major functional areas such as marketing, finance, supply chain and forecasting participate in the S&OP process.

A Long Term Strategic Forecasting Process has been focused for new products with little or no sales history. Forecasts of this type are typically prepared once a year by GSF&A. Those who participate in the preparation of these forecasts are GSF&A forecast manager, forecast analyst, affiliate brand manager, GSM market researcher, and GSM global brand manager.

Q. What types of forecasts do you prepare and how far ahead do you forecast?

A. There are two types of forecasts prepared at Wyeth-Ayerst. Tactical forecasts are prepared by each affiliate by country, by month and by SKU, and are prepared both in units and local currency. Depending on the affiliate office capability, adjusted order history is used to create sales forecasts either judgmentally or statistically using time series methods. Regression analysis is also used though infrequently. Short Term Forecasts are developed for a rolling 24-month horizon for local marketing and supply chain management.

Strategic forecasts, on the other hand, are typically generated by GSF&A. …