Demand managers exchange experiences in forecasting
Do you need to be good at forecasting in order to sense, shape and shift market demand? Heineken thinks so. This global market player was one of ten participants sharing their ideas and experiences on forecasting and demand planning during a round-table discussion. Read on to learn the views of the other nine market players.
By Ingrid Essenburg
Forecasting remains a necessary and complex activity in a volatile market. Supply Chain Movement and SAS, supplier of business analytics software, recently organised a round-table discussion with demand and supply chain managers. “Because we believe that demand-driven forecasting is often the poor relation which could enable companies to further reduce their costs,” says Patrick van Loon, business solutions manager Supply Chain Intelligence at SAS.
Predicting store demand and service parts
During the kick-off session in which participants introduce themselves to the group and share their forecasting-related challenges, it emerges that, within their roles, each and every manager at the round-table discussion feels the need to forecast better. “But,” says Robert Hermans, global supply chain manager at Philips Healthcare, “we are an order-driven company. That means that our primary challenge is not forecasting, but rather achieving the financial targets and reducing inventory in the supply chain.” In response, Martijn Lofvers, chief editor of Supply Chain Movement who is leading the discussion, asks: “Is after-sales not a forecast issue for you?” Hermans confirms: “Yes, we forecast the demand for service parts as part of our supply chain planning for our after-sales customer service. We then use these forecasts to ensure that we have the right spare parts in stock in the right warehouse.”
For Janneke van den Broek, supply chain manager at Dutch supermarket chain C1000, the main forecasting challenge lies in better predicting store demand so that the stockrooms are filled on time. “In addition, I want to improve the standard of forecasting around promotions and changes to the product range.” Likewise, Frans van den Boomen, value chain manager at Mars in The Netherlands, sees event forecasting around promotions as a challenge. Plus he adds another challenge: joint forecasting with customers. For Jesta Vergnes, demand manager at HJ Heinz, it is a challenge to align a forecast with colleagues in marketing, sales and finance before analysing its implications for supply. Furthermore, she identifies forecasting various scenarios as another challenge. Ardjan van der Blonk, supply chain manager at the eyewear chain Pearle Benelux: “In our company, too, it’s about aligning purchasing both with demand and with the wishes of marketing and sales.”
Respond to a change in demand
For Willemien Broeders, demand manager Northwest Europe at manufacturer of candies and chewing gums Perfetti Van Melle, the forecasting issue revolves around, “How quickly can you respond to a change in demand?” And for Anton de Romijn, planning & sourcing manager Western Europe at Heineken says: “Do you have to forecast each SKU individually?” He explains that Heineken is currently running demand segmentation pilots at local level. “Because our global commerce department often has different ideas about sales than the commerce departments in the individual countries.”
Niels Toussaint, demand and supply chain manager at Astellas Pharma, wants to make more use of statistical models for forecasting: “We only want to incorporate human input where it actually adds value.” Moreover, Astellas is an advocate of international standards for forecasting to make it easier to use as input for S&OP processes. Toussaint explains why: “25 locations, two factories and numerous contract manufacturers, all working with their own forecasting methodology. We want to bring these methodologies in line with each other.” Henk Groenewold, demand manager EMEA at AkzoNobel Automotive & Aerospace Coatings, notes that it is important to involve the sales department in forecasting activities, since that is the source of the market information. Koen Doclo, EMEA demand manager at DuPont Performance Coatings, responds: “We already involve sales. Now we’re aiming for a forecast accuracy of over 70 percent, and we’ve brought in SAS to help us achieve this. Our second challenge is to find leading indicators for forecasting.”