Ownership of forecasting function
Organizations treat forecasting function differently based on their maturity levels; with a lagging organization having an ad-hoc approach to the entire process. There is hardly any focus on forecasting process and a dominant function decides the final numbers that also keeps changing and always remains a moving target. On the other hand, a mature supply chain organization would try to incorporate systems in place to ensure that forecasting as a process works fine and achieves the overall business objectives. I have seen and experienced that “right ownership” of this process is a very important and critical element to ensure that the forecasts are not biased and serves its desired purpose.
The usual owners of forecasts are sales/marketing functions since they are the ones closest to the customers and are responsible for getting business. But the same reason could become the bottleneck in most of these organizations since the forecast is not that data-driven, tends to remain biased and has a political element in it, as well. Ultimately, the organizations suffer from high inventory with a poor customer service since all the links in supply chain are not aligned and other key stakeholders/functions (such as finance, planning and manufacturing) are not consulted in the forecasting process. In my view, to arrive at forecasts free of bias, there should be a dedicated function headed by a Chief Supply Chain Officer. This function is independent of all above-mentioned entities, yet one which has access to and inspires collaborative confidence from all of them. This would enable best use of inputs that business needs to obtain from the market and internal stakeholders for an effective operational plan to achieve business goals. I have seen it working effectively in many organizations; although it has its own set of challenges and there is always a learning curve where one can customize the approach based on its own organization’s DNA.
Along with one of my colleague, I had also shared this thought in one of the conferences, where it got published in their proceedings. I would like to hear more views and comments from supply chain practitioners on this subject – so please feel free to comment.