DOCSLIB.ORG

Six Design Principles for Healthier Forecasts

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Six Design Principles for Healthier Forecasts IBM Software Group Budgeting and Forecasting White Paper Business Forecasting: Six Design Principles for Healthier Forecasts By Steve Player and Steve Morlidge, Beyond Budgeting Round Table 2 Business Forecasting: Six Design Principles for Healthier Forecasts Executive summary Achieving hardy performance over the long term requires Key takeaways businesses to develop healthy forecasting processes. 1. Traditional budgeting and forecasting practices Forecasting health can be developed, or restored, by frequently fall short of improving performance health; adhering to the six principles presented in this paper. in many cases, traditional budgeting and forecasting practices actually contribute to performance woes. Finance managers whose organizations are just beginning their 2. Eliminating unhealthy forecasting practices is a journeys to healthier forecasting processes should consider must, but it is not sufficient; finance managers reading the first installment in thisBusiness Forecasting white can, and should, develop a regimen of healthy paper series. That paper, “Seven Symptoms of Forecasting forecasting practices that support the achievement Illness,” examines prevalent maladies that commonly plague of strategic objectives. traditional budgeting and forecasting activities. 3. The implementation of the six business forecasting principles identified in this paper can help finance The successful implementation of a rolling forecasting managers create and implement a forecasting process approach requires consideration and execution of the that aligns with, and enables the execution of, following six principles: corporate strategy. • Understand the characteristics of a healthy forecasting process • Recognize the impact of reaction times • Treat each system appropriately • Take vital signs • Understand variations within the body • Live healthfully This paper provides a case example of successful rolling forecasts in practice and examines the nature and requirements of each of the six business forecasting principles. Budgeting and Forecasting 3 Introduction Future Ready Much of the discussion in this white paper, as with the If you focus on results, you will never change. other papers in this Business Forecasting series, is inspired If you focus on change, you will get results. by a collaboration between the IBM Cognos Innovation Center for Performance Management and Steve Player -- Jack Dixon (Author of historical fictional novels) and Steve Morlidge, authors of Future Ready: How to Master Business Forecasting (Wiley, 2010). The book’s premise is a straightforward one: When making The first step to better health is recognizing what ails you. decisions, organizations cannot rely solely on information about what has happened. Instead, As any elite athlete knows, the key to superior performance companies also need information about what its depends on more than the elimination of detrimental habits. managers believe might happen – information that is A healthy regimen should be implemented and followed. generated through the process of forecasting. To date, the bulk of business forecasting practices have ranged The same holds true from a business perspective, particularly from ineffective to downright crippling. No company, in the realm of forecasting, planning and budgeting. and no individual, can predict the future with complete certainty. Therefore, the objective of business The previous entry in this Business Forecasting white paper forecasting should be to become “Future Ready.” series, “Seven Symptoms of Forecasting Illnesses,” showed Companies can do this by systematically and rationally finance managers how to detect and remedy seven different assembling information that gives managers forward problems that commonly plague forecasting processes. This visibility regarding likely outcomes as well as the paper builds on that foundation by examining the six design potential losses and opportunities (i.e., the risks) principles of robust business forecasting: associated with these outcomes. • Understand the characteristics of a healthy forecasting process. • Recognize the impact of reaction times. • Treat each system appropriately. • Take vital signs. • Understand variations within the body. • Live healthfully. 4 Business Forecasting: Six Design Principles for Healthier Forecasts How the principles pay off The sales pitch worked—as did the larger change effort. The By adhering to principles listed above, companies can company now completes a rolling forecast four times a year, strengthen their daily performance over the long-term. Tw and this process requires less time that the previous annual telecom, for example, recently relied on these principles to budgeting exercise. The time-savings frees up corporate make good on a resolution the company issued entering the finance to invest more time to help run the business from recent recession: avoiding employee layoffs. a strategic perspective rather than fretting over insignificant budget variances. A Beyond Budgeting practitioner since 2004, tw telecom is a leading provider of managed networking solutions to “We’ve followed this rolling forecast method since the end a wide array of businesses and organizations throughout of 2004, so we have a rhythm going,” says Peters. “The the United States. accuracy improves every single time; you get much more precise. And the pain level is so much lower.” “We would take it as a bit of a failure if we had to lay people off, because this would mean that we aren’t planning properly,” Companies and managers who want to reduce their own Mark Peters, executive vice president and CFO of tw telecom, forecasting-related pain can start adhering to the following says of the company’s resolution. “Never say ‘never,’ but being six principles. able to avoid large layoffs is a real advantage because it means that we’ve avoided the disruption in productivity and morale Principle 1: Understand the characteristics they cause, plus we’ve retained the capacity to ramp up quickly of a healthy forecasting process once we return to higher growth with a stronger economy.” Business forecasting can improve an organization’s overall health by identifying the actions necessary to move from the Tw telecom replaced a highly detailed, spreadsheet-intensive current situation (that is, reality) to a better future (that is, the annual budgeting process with a six-month rolling forecast, achievement of a strategic objective or target). in large part, because of management’s frustration with the exercise. “You spend three months doing [the traditional Although it makes sense to plan before enacting an budget] … and, inevitably, by the time you’re done, it’s old improvement program, the original plan (traditionally defined news,” Peters adds. “It doesn’t provide a foundation for an as the “budget”) frequently—and quickly—becomes outdated agile company.” because of changes in underlying business conditions. This is why it makes more sense to forecast where performance is So, tw telecom focused on change. Because managers going. By doing so, organizations can use that information to throughout the organization were accustomed to holding their identify the corrective actions necessary to better ensure that sales and operations employees responsible for achieving a future performance achieves strategic objectives. specific budget number, Peters and his team continually communicated the value of adaptability over accountability; When developing a forecast, managers should distinguish specifically, they emphasized the futility of holding people between a “forecast” (where you think you will be) and a target accountable to numbers that were outdated by the time they (where you want to be). were produced through the traditional budgeting process. Budgeting and Forecasting 5 Too often, a gap exists between a forecast and a target, at least • Aligned. When addressing multiple health issues, doctors until the appropriate corrective decisions and actions take take time to evaluate the interaction of different medicines place. Even then, however, this gap is likely to reappear, even and treatments. The objective is to make sure that the in the most stable business environments. medications are safe when delivered in combination. Addressing the performance health of a company requires a For these reasons, managers should understand the qualities similar approach. Within companies, different treatments or that define a healthy forecast. A healthy forecast is: medicines equate to the competing versions of the truth that various organizational groups often promulgate for self- • Timely. If a company’s performance shows warning signs, a serving reasons. These motivations and multiple performance rough-and-ready forecast delivered quickly is much more projections can cause highly negative reactions. Companies valuable than a painstakingly detailed forecast that arrives too should settle on a single treatment when creating forecasts late to drive corrective action. and, when the need arises, for re-forecasting also. • Actionable. Too much detail, or the wrong details, can limit • Cost-effective. While every process needs to be cost- the forecast’s effectiveness. Only include details that are effective, this quality marks a critical, and often relevant to decision-making. Also, keep in mind that forecasts misunderstood, specification that warrants an explanation. should contain different information than budgets contain. First, evaluating cost requires valuable soul-searching about Forecasts typically
Load more

Recommended publications
  • Secure Collaborative Planning, Forecasting, and Replenishment (SCPFR)
    Secure Collaborative Planning, Forecasting, and Replenishment (SCPFR) Mikhail Atallah* · Marina Blanton* · Vinayak Deshpande** Keith Frikken* · Jiangtao Li* · Leroy B. Schwarz** * Department of Computer Sciences ** Krannert School of Management Purdue University West Lafayette, IN 47907 May 30, 2005 Extended Abstract 1. Introduction It is well known that information-sharing about inventory levels, sales, order-status, demand forecasts, production/delivery schedules, etc. can dramatically improveme supply-chain per- formance. Lee and Whang (2000) describe several real-world examples. The reason for this improvement, of course, isn’t information-sharing, per se, but, rather, because shared infor- mation improves decision-making. However, despite its well-known benefits, many companies are averse to sharing their so-called “private” information, fearful that their partner(s) or competitor(s) will take advantage of it. Secure Multi-Party Computation (SMC) provides a framework for supply-chain partners to make collaborative forecasts and/or collaborative decisions without disclosing private in- formation to one another; and, most important, without the aid of a “trusted third party”. SMC accomplishes this through the use of so-called protocols. An SMC protocol involves theoretically-secure hiding of private information (e.g., encryption), transmission, and pro- cessing of hidden private data. Since private information is never available in its original form (e.g., if encryption is used to hide the data, it is never decrypted), any attempt to hack or misuse private information is literally impossible. In our research, we apply SMC protocols to facilitate collaborative forecasting and inventory-replenishment decisions between a single supplier and a single retailer. The model is an extension of Clark and Scarf (1960).
    [Show full text]
  • Earned Value Management Tutorial Module 6: Metrics, Performance Measurements and Forecasting
    Earned Value Management Tutorial Module 6: Metrics, Performance Measurements and Forecasting Prepared by: Module 6: Metrics, Performance Measurements and Forecasting Welcome to Module 6. The objective of this module is to introduce you to the Metrics and Performance Measurement tools used, along with Forecasting, in Earned Value Management. The Topics that will be addressed in this Module include: • Define Cost and Schedule Variances • Define Cost and Schedule Performance Indices • Define Estimate to Complete (ETC) • Define Estimate at Completion (EAC) and Latest Revised Estimate (LRE) Module 6 – Metrics, Performance Measures and Forecasting 2 Prepared by: Booz Allen Hamilton Review of Previous Modules Let’s quickly review what has been covered in the previous modules. • There are three key components to earned value: Planned Value, Earned Value and Actual Cost. – PV is the physical work scheduled or “what you plan to do”. – EV is the quantification of the “worth” of the work done to date or “what you physically accomplished”. – AC is the cost incurred for executing work on a project or “what you have spent”. • There are numerous EV methods used for measuring progress. The next step is to stand back and monitor the progress against the Performance Measurement Baseline (PMB). Module 6 – Metrics, Performance Measures and Forecasting 3 Prepared by: Booz Allen Hamilton What is Performance Measurement? Performance measurement is a common phrase used in the world of project management, but what does it mean? Performance measurement can have different meanings for different people, but in a generic sense performance measurement is how one determines success or failure on a project.
    [Show full text]
  • Are Forecasting Models Usable for Policy Analysis? (P
    Federal Reserve Bank of Minneapolis Are Forecasting Models Usable for Policy Analysis? (p. 2) Christopher A. Sims Gresham's Law or Gresham's Fallacy? (p.17) Arthur J. Rolnick Warren E. Weber 1985 Contents (p. 25) Federal Reserve Bank of Minneapolis Quarterly Review Vol. 10, No. 1 ISSN 0271-5287 This publication primarily presents economic research aimed at improving policymaking by the Federal Reserve System and other governmental authorities. Produced in the Research Department. Edited by Preston J. Miller, Kathleen S. Rolfe, and Inga Velde. Graphic design by Phil Swenson and typesetting by Barb Cahlander and Terri Desormey, Graphic Services Department. Address questions to the Research Department, Federal Reserve Bank, Minneapolis, Minnesota 55480 (telephone 612-340-2341). Articles may be reprinted if the source is credited and the Research Department is provided with copies of reprints. The views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve Systemi Federal Reserve Bank of Minneapolis Quarterly Review Winter 1986 Are Forecasting Models Usable for Policy Analysis?* Christopher A. Sims Professor of Economics University of Minnesota In one of the early papers describing the applications of and, in a good part of the economics profession, has the vector autoregression (VAR) models to economics, position of the established orthodoxy. Yet when actual Thomas Sargent (1979) emphasized that while such policy choices are being made at all levels of the public models were useful for forecasting, they could not be used and private sectors, forecasts from these large models, for policy analysis.
    [Show full text]
  • Using Earned Value Data to Forecast Program Schedule
    Using Earned Value Data to Forecast the Duration and Cost of DoD Space Programs Capt Shedrick Bridgeforth Air Force Cost Analysis Agency (AFCAA) Disclaimer The views expressed in this presentation are those of the author and do not reflect the official policy or position of the United States Air Force, Department of Defense, or the United States Government. This material is declared a work of the U.S. Government and is not subject to copyright protection in the United States. 2 Overview 1. Summary 2. Background 3. Methodology 4. Results 5. Conclusion 3 Summary AFCAA studied the accuracy of various cost estimating models for updating the estimate at completion (EAC) for space contracts The Budgeted Cost of Work Performed (BCWP) based model was the most accurate The BCWP model assumed the underlying duration estimate was accurate Objective: Assess the accuracy of the duration method used in the AFCAA study and explore additional methods Duration Results: 2.9 to 5.2% overall improvement (mean absolute percent error - MAPE) Cost Results: 7.5% overall improvement (MAPE) Background EACBCWP = (MonthEst Completion – Monthcurrent) * BCWPBurn Rate + BCWPTo Date [# of months remaining * earned value/month + earned value to date] Duration: the Critical Path Method (CPM) is used to determine the duration of a project (contract) Contractor Reported Estimated Completion Date (ECD) “Status quo” Background BCWP vs. Time 900 800 700 Millions 600 500 400 300 200 100 0 0 2 4 6 8 10 12 Months y = 72,401,283x - 45,653,892 R² = 0.996 6 Background
    [Show full text]
  • Customer Relationship Management (CRM): a Technology Driven Tool
    Volume IV March 2012 Volume IV March 2012 Research Papers 2 Customer Relationship Management (CRM): A Technology Driven Tool Dr. Mallika Srivastava Assistant Professor, SIBM, Pune E-mail : [email protected] Introduction Customer Relationship Management (CRM) is a management approach that seeks to create, develop and enhance relationships with carefully targeted customers in order to maximize customer value, corporate profitability and thus shareholders’ value. Managing relationship with the customers has been of importance since last many centuries, but with invent of information technology a new discipline in name of CRM has emerged. The CRM is primarily concerned with utilizing information technology to implement relationship marketing strategies. The emergence of CRM is a consequence of a number of trends like shift in business focus from transactional to relationship marketing, transition in structuring organizations on a strategic basis from functions to processes, and acceptance of the need for trade-off between delivering and extracting customer value. The greater utilization of technology in managing and maximizing value of information has also led to modern shape of CRM. The aim of CRM is to acquire and retain customers by providing them with optimal value in whatever way they deem important. This includes the way businesses communicate with them, how they buy, and the service they receive - in addition, of course, getting the best through the more traditional channels of product, price, promotion and place of distribution. Essentially, CRM is a customer focused business strategy which brings together customer lifecycle management, business process and technology. The trend for companies to shift from a product focused view of the world to a customer focused one is the modern strategy of the business, as products become increasingly hard to differentiate in fiercely competitive markets.
    [Show full text]
  • Reimagine Forecasting: High Stakes Decision Making for Cfos
    Unlock data possibilities www.pwc.com/analytics Make better and faster decisions Expand your perspective with trusted and actionable data-driven insights for extraordinary results Reimagine forecasting: High stakes decision making for CFOs May 2016 How can CFOs deliver more value to their organizations? Reimagining forecasting Unlocking the power of may seem like a gratuitous data and analytics to think exercise in crystal ball about what will happen, design. But it is becoming a assessing its likelihood, critical step that CFOs should and contemplating the take to make sure their implications mean the companies are using leading difference between accurate indicators to maintain their or inaccurate forecasts, positions as market-leading with multi-million or billion organizations, strive to dollar impacts. innovate, and protect the brand – instead of lagging the pack with sub-optimal indicators. “The future ain’t what it used to be.” —Yogi Berra It’s time to reimagine forecasting: Get started We are always forecasting - thinking The signals in the noise increasing cost or ceding revenue to about what will happen, assessing It can be very difficult to find the signal competitors with close substitutes. its likelihood, and contemplating the in the noise, and it is becoming more In services industries, the inability to implications. But for CFOs, the stakes are important than ever. Short-termism accurately forecast demand for specific much higher – the difference between and fast news cycles exacerbate the offerings requiring specific skill sets to accurate versus inaccurate forecasts can effects of missing a forecast on company deliver may result in having too much be worth billions of dollars, and a job.
    [Show full text]
  • Forecasting Supply Chain Management
    Forecasting A forecast is a prediction of what will occur in the future. Meteorologists forecast the weather, sportscasters and gamblers predict the winners of football games, and companies attempt to predict how much of their product will be sold in the future. A forecast of product demand is the basis for most important planning decisions. Planning decisions regarding scheduling, inventory, production, facility layout and design, workforce, distribution, purchasing, and so on, are functions of customer demand. Long-range, strategic plans by top management are based on forecasts of the type of products consumers will demand in the future and the size and location of product markets. Forecasting is an uncertain process. It is not possible to predict consistently what the future will be, even with the help of a crystal ball and a deck of tarot cards. Management generally hopes to forecast demand with as much accuracy as possible, which is becoming increasingly difficult to do. In the current international business environment, consumers have more product choices and more information on which to base choices. They also demand and receive greater product diversity, made possible by rapid technological advances. This makes forecasting products and product demand more difficult. Consumers and markets have never been stationary targets, but they are moving more rapidly now than they ever have before. Management sometimes uses qualitative methods based on judgment, opinion, past experience, or best guesses, to make forecasts. A number of quantitative forecasting methods are also available to aid management in making planning decisions. In this chapter we discuss two of the traditional types of mathematical forecasting methods, time series analysis and regression, as well as several nonmathematical, qualitative approaches to forecasting.
    [Show full text]
  • Critical Analysis on Earned Value Management (EVM) Technique in Building Construction
    Critical Analysis on Earned Value Management (EVM) Technique in Building Construction CRITICAL ANALYSIS ON EARNED VALUE MANAGEMENT (EVM) TECHNIQUE IN BUILDING CONSTRUCTION Luis Felipe Cândido1, Luiz Fernando Mählmann Heineck2 José de Paula Barros Neto3 ABSTRACT Earned Value Management (EVM) is a technique of performance measurement focused on project physical, financial and time progress, indicating planned and actual performance, variations of them and forecasts on final project duration and cost. It takes a step further traditional measurement tools like PERT/Cost and C/SCSC. EVM is strongly supported by Project Management Community gather around the Project Management Institute, but recently the technique is being criticized in respect to its conceptual problems and implementation difficulties. This paper aims to explore in greater depth this debate through a case study on a construction project that applied EVM as a planning and control tool. Four major problems are analyzed in the search for an enlarged list of topics the EVM approach fails to support lean construction applications. Among them are the disregard for the mobilization of resources phase and the lack of consideration of construction indirect costs. Finally, the authors concluded that EVM is just an extension of the traditional approach of measuring physical and financial advances over time. This narrow approach is insufficient to provide a comprehensive managerial tool, as became clear through the analyses of the building project under consideration. KEYWORDS EVM (Earned Value Management), Control of Building Projects, Lean Construction and Project Management. INTRODUCTION Uncertainty and complexity typical of constructions projects led building companies to adopt more sophisticated techniques and tools to effectively plan and control building developments.
    [Show full text]
  • Chapter 02 Strategy and Human Resources Planning
    TRUE/FALSE 1 : Strategic planning involves a set of procedures for making decisions about an organizations long-term goals and strategies. A : true B : false Correct Answer : A 2 : Neil is in the process of recruiting and selecting new employees in a way that caters to the welfare of his organizations existing employees. He is working on human resource planning (HRP). A : true B : false Correct Answer : A 3 : Strategic human resources management (SHRM) is a combination of strategic planning and HR planning. A : true B : false Correct Answer : A 4 : The first step in strategic planning of a firm involves establishing a mission, vision, and values for the firm. A : true B : false Correct Answer : A 5 : When developing a statement that provides a perspective on where her company is headed and what the organization can become in the future, Elana is working on the organizations mission. A : true B : false Correct Answer : B 6 : Organizational core values form the foundation of a firms decisions. A : true B : false Correct Answer : A 7 : Changes in labor supply can place limits on the strategies available to firms. A : true B : false Correct Answer : A 8 : An internal analysis enables strategic decision makers to assess an organizations 1 / 14 workforceits skills, cultural beliefs, and values. A : true B : false Correct Answer : A 9 : Internal analysis focuses on culture and conflicts within an organization. A : true B : false Correct Answer : B 10 : Susie has been tasked with examining attitudes and expectations of employees. She can accomplish this by conducting a cultural audit.
    [Show full text]
  • Strategic Planning and Forecasting Fundamentals J
    University of Pennsylvania ScholarlyCommons Marketing Papers Wharton School 1-1-1983 Strategic Planning and Forecasting Fundamentals J. Scott Armstrong University of Pennsylvania, [email protected] Follow this and additional works at: http://repository.upenn.edu/marketing_papers Part of the Marketing Commons Recommended Citation Armstrong, J. S. (1983). Strategic Planning and Forecasting Fundamentals. Retrieved from http://repository.upenn.edu/ marketing_papers/123 Postprint version. Published in The Strategic Management Handbook, edited by Kenneth Albert (New York: McGraw-Hill 1983), pages 1-32. The uthora asserts his right to include this material in ScholarlyCommons@Penn. This paper is posted at ScholarlyCommons. http://repository.upenn.edu/marketing_papers/123 For more information, please contact [email protected]. Strategic Planning and Forecasting Fundamentals Abstract Individuals and organizations have operated for hundreds of years by planning and forecasting in an intuitive manner. It was not until the 1950s that formal approaches became popular. Since then, such approaches have been used by business, government, and nonprofit organizations. Advocates of formal approaches (for example, Steiner, 1979) claim that an organization can improve its effectiveness if it can forecast its environment, anticipate problems, and develop plans to respond to those problems. However, informal planning and forecasting are expensive activities; this raises questions about their superiority over informal planning and forecasting. Furthermore, critics of the formal approach claim that it introduces rigidity and hampers creativity. These critics include many observers with practical experience (for example, Wrapp, 1967). This chapter presents a framework for formal planning and forecasting which shows how they interact with one another. Suggestions are presented on how to use formal planning for strategic decision making.
    [Show full text]
  • Demand Forecasting for Supply Processes in Consideration of Pricing and Market Information
    View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Cranfield CERES International Journal of Production Economics, 2009, Volume 118, Issue 1, Pages 55-62 Demand forecasting for supply processes in consideration of pricing and market information Gerald Reiner1, Johannes Fichtinger2 We develop a dynamic model that can be used to evaluate supply chain process improvements, e. g. different forecast methods. In particular we use for evaluation a bullwhip effect measure, the service level (fill rate) and the average on hold inventory. We define and apply a robustness criterion to enable the comparison of different process alternatives, i. e. the range of observation periods above a certain service level. This criterion can help managers to reduce risks and furthermore variability by applying robust process improvements. Furthermore we are able to demonstrate with our research results that the bullwhip effect is an important but not the only performance measure that should be used to evaluate process improvements. Introduction This paper deals with the evaluation of supply chain process improvements under special con- sideration of demand forecasting. Forecasting is an important lever of performance manage- ment of supply chain processes. To fulfill the customer requirements on delivery performance demand forecasts are necessary, e. g. to acquire resources (capital, equipment, labor). In this context an important question arises. How should the performance of different demand forecast alternatives be evaluated under consideration of the supply chain process. Lee et al. (2004) present the bullwhip effect (i. e. the amplification of demand variability upstream the supply chain) as a consequence of the use of quantitative forecast methods in multiple echelons in the supply chain.
    [Show full text]
  • Forecasting and Risk Analysis in Supply Chain Management GARCH Proof of Concept
    Forecasting and Risk Analysis in Supply Chain Management GARCH Proof of Concept Shoumen Datta 1 , Clive W. J. Granger 2 , Don P. Graham 3 , Nikhil Sagar 4 , Pat Doody 5 , Reuben Slone 6 and Olli‐Pekka Hilmola 7 1 Research Scientist, Engineering Systems Division, Department of Civil and Environmental Engineering, Research Director and Co‐Founder, MIT Forum for Supply Chain Innovation, School of Engineering, Massachusetts Institute of Technology, Room 1‐179, 77 Massachusetts Avenue, Cambridge MA 02139 2 Research Professor, Department of Economics, University of California at San Diego, La Jolla CA 92093 3 Founder and CEO, INNOVEX LLC 4 Vice President, Retail Inventory Management, OfficeMax Inc, 263 Shuman Boulevard, Naperville, IL 60563 5 Senior Lecturer, Department of Mathematics and Computing and Executive Director, Center for Innovation in Distributed Systems, Institute of Technology Tralee, County Kerry, Ireland 6 Executive Vice President, OfficeMax Inc, 263 Shuman Boulevard, Naperville, IL 60563 7 Professor of Logistics, Lappeenranta University of Technology, Kouvola Research Unit, Prikaatintie 9, FIN‐ 45100 Kouvola, Finland Abstract Forecasting is an underestimated field of research in supply chain management. Recently advanced methods are coming into use. Initial results presented in this chapter are encouraging, but may require changes in policies for collaboration and transparency. In this chapter we explore advanced forecasting tools for decision support in supply chain scenarios and provide preliminary simulation results from their impact on demand amplification. Preliminary results presented in this chapter, suggests that advanced methods may be useful to predict oscillated demand but their performance may be constrained by current structural and operating policies as well as limited availability of data.
    [Show full text]