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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.


I think the Supply Chain officer role, as you have envisaged, is anyway played by Top management person in one way or another in a forecasting and planning process. No single role can take full responsibility since it requires inputs from the entire gamut of processes. In a typical CPG situation a Sales guy will probably inflate the potential demand in order to corner the glory and the huge trade promotion funds whose spending in most of the companies is quite loosely accounted for. The Demand planner would tone down the production figures being more skeptical of the Sales guy's bravado. They would get into a shouting match through the planning review cycles and would finally agree to a figure or the Demand planner takes the call in consultation with the production facilities who caters to the global demand from some South East country. The first cut goes to the finance guy who pours over the margin/ net/ spend figures, frets & fumes & gets some changes through and finally approves. In a matter of deadlock over certain categories the Top Dog steps in and cracks the whip. There will be tools for each of the involved parties Sales/ Demand/ Supply/ Finance which looks at past figures, trends, weightages, judgements and extrapolates but the final figures are updated and approved by the guy (or lady) whose job depends on it.

The inputs are incorporated from all the key stakeholders the way described, but this Cell has the responsibility of incorporating data inputs in the entire consensus forecasting process. Demand planners are a part of this function and Forecast accuracy is one of their main KPIs. The top guy (business head) approves the finalized forecast, but the accountability of managing the entire process remains with this function.

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