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Predicting the Future
Have you ever felt you could predict the future? Have you ever been thinking about someone and then the phone rings and it is that person or you bump into them in the store suddenly?
Weather is forecasted and predicted using very scientific models. Using a good deal of intuition, Nostradamus members have a vision of what may happen at specific dates in the future.
This week’s esourcing wiki reviews the benefits of demand driven forecasting and subsequent challenges. This is similar to predicting the future for procurement professionals. Similar to forecasting weather, there are some scientific models to use. If someone succeeds at predicting the demand for their product line or organization, are they lucky? Or are they incredibly good at utilizing the forecast models and estimating demand accurately? Some of it certainly has to do with intuition as well.
The esourcing Wiki stresses that the forecast model has to constantly be watched and re-worked based on the actual demand. The customer volume can change and you don’t want to be cut short, missing sales or alternatively, be left with excess inventory no one wants.
There is a very popular book by Charles Chase: Demand-Driven Forecasting: A Structured Approach to Forecasting. He has mastered the balance between practical techniques and advanced statistical methods. This might be a valuable resource for you if you are working your organization towards this type of process.
What have you been able to forecast and how has it helped your organization? What lessons learned can you offer for those just beginning to utilize this process?