Academic journal article The Journal of Business Forecasting Methods & Systems

The Need for a Forecasting Champion

Academic journal article The Journal of Business Forecasting Methods & Systems

The Need for a Forecasting Champion

Article excerpt

Outlines the characteristics of a forecasting champion . . . the champion is the one who not only can develop good forecasts but also know how they can be used effectively in business planning. . . for a continuous improvement in the forecasting function, it must be someone's primary responsibility.

Outstanding performance in sales forecasting is a difficult, yet worthy goal for any company. However, there is more to achieving outstanding performance than selecting the right piece of forecasting software or choosing the optimum statistical technique. Forecasting must be viewed as a fundamental business process.

Over the past three years, our research team has undertaken a data collection effort aimed at identifying those factors that contribute to a company's ability to be successful in sales forecasting. This data collection took the form of in-depth analysis of the sales forecasting management practices at 25 companies. The purpose of this paper is to present one of the key findings from this research. Specifically, our intent is to discuss the important role that a forecasting champion can play in the critical business process of sales forecasting.

First, we will briefly describe the data collection effort that serves as the foundation for our ideas about the roles and importance of a forecasting champion. Second, based upon our findings from the 25 companies we have studied, we will describe the general characteristics of a sales forecasting champion. Next, we will discuss the roles that sales forecasting champions can play in companies that take different approaches to the sales forecasting process. The paper will end with a discussion of the potential benefits that a company can realize from putting a sales forecasting champion in place.

THE DATA COLLECTION EFFORT

This research began with the selection of companies with histories as leading financial and/or market share performers, though not necessarily top performers in sales forecasting. In fact, to understand the variations in sales forecasting management performance in successful companies, the selection process was intended to include companies that have achieved varying degrees of success in forecasting sales. In addition, companies at different levels within the supply chain were included. This selection process resulted in site visits with 20 manufacturers, three distribution firms, and two retailers: Allied-Signal, Anheuser-Busch, Becton-Dickinson, Coca Cola, Colgate Palmolive, DuPont, Eastman Chemical, Federal Express, Hershey Foods, Kimberly Clark, Lykes Pasco, Michelin, Nabisco, J.C. Penney, Pillsbury, Pro Source, Reckitt and Colman, Red Lobster, RJR Tobacco, Sandoz, Schering Plough, Sysco, Tropicana, Warner Lambert, and Westwood Squibb.

Company analysis began with a request for any documentation of the sales forecasting management process. This documentation included reports, documentation of systems and/or management procedures, and informal protocols. Once this information was analyzed, an interview schedule was arranged with anyone in the company affiliated with sales forecasting, including developers and users of the sales forecasts. Before visiting the company to conduct the interviews, a detailed 8-page protocol was sent to each person to be interviewed. The interviews were conducted on-site by the research team, with two members of the research team in each interview to ensure inter-judge reliability. Interviews were tape recorded and the transcripts from these interviews were analyzed for sales forecasting management content. The purpose of this analysis was to identify those key factors that support the successful management of the sales forecasting function.

One factor that consistently had a strong impact on the level of sales forecasting success was the existence of a sales forecasting champion. The following section describes the characteristics of forecasting champions at those companies that are particularly successful with sales forecasting. …

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