Best Practices in Demand Planning and Sales Forecasting
Jan 13 2011 | Northern NJ

One Day Workshop - $445  

See below to find out how you can attend for FREE!

Organizations spend a lot of time and resource on forecasting efforts to improve the accuracy of the demand forecasts that are used in their supply chain. This workshop will cover the best practices necessary to achieve your goals of an accurate demand plan and a lean supply chain process...

 

See below for a chance to attend this seminar FREE!

Those who register between now and Jan 7, 2011 will be put into a drawing for a free admission. To be eligible for this special drawing, you MUST register at this link:

CLICK HERE!

In this Newsletter

  • Forecast Accuracy Question.
  • MAPE or MPE ?
  • Demand Planning 1-day Workshop NJ
  • Top 10 Planning Mantras
  • Demand Planning 2-Day Workshop MA
  • Services provided

Demand Planning & Forecasting Workshop May 25-26 | Boston MA

 

BROCHURE | INFO | REGISTER

 

In this specialized two-day course, we will explain the modeling methodology and process behind accurate demand forecasts and how to effectively use promotional information to arrive at a consensus forecast. The focus will be on demand modeling using statistical techniques, the methodology to perform model diagnostics, forecast accuracy measurement and the process to incorporate market intelligence. Read more

 

 

 

 

Demand Planning LLC

10G Roessler Road

Woburn MA 01801

 

Attend our Jan Workshop for FREE! - Details Here.

Age old question on calculating Forecast accuracy (%)

 

Regarding the measurement of the forecast accuracy we received a question from a European user. The Formula 1 below shows a common (or intuitive) suggestion. However, in SAP Formula 2 is applied and that makes people wonder which is better.
 

Formula 1 favours the situation of underforecasting, while Formula 2 favours overforecasting.


Formula 1.

FC acc (%) = max{ 1 – |Demand-Forecast|/Demand, 0}

Formula 2.

FC acc (%) = max{ 1 – |Demand-Forecast|/Forecast, 0}

Do any of you have any further experience or thoughts about the difference in performance?


Read DemandPlanning.net response to the above question Link.  http://www.business-forecasting.us/blog/?p=153#comments.

 

What is the difference between MAPE and MPE?  Is one better than the other?

 

 

==>  This calculates the average of the Percentages.

 

==>  This gives you the correct MAPE  weighted by volume.

 

Averaging percentages can give you strange numbers.   This is not advised.  So equation 1 for MAPE is not the recommended solution, although many academics use this as a model diagnostic.

 

Equation 2 gives you the correct MAPE as used by the Supply Chain practitioners.  This weights the MAPE by volume.   small numbers don’t heavily influence this calculation.  So that was the easy part.

 

http://www.business-forecasting.us/blog/?p=134

 


Top 10 Demand Planning Mantras

Mark Chockalingam

 

  1. GIGO – Define your demand history right before developing forecasts and plans.
  2. All you need to know about forecasts, you need to start from the Data Garden. Understand your data and make appropriate adjustments before beginning the forecast process.
  3. Measure to mature! You cannot improve the process unless you measure where it is right now. Design and deploy the right set of demand Metrics.
  4. Know your Stats. It helps to start with a good statistical modeling tool to develop baseline forecasts.
  5. Define a monthly process!
  6. Don’t do the same thing every month. Forecast by Exception!
  7. Assess and quantify your promotion. Get promotional intelligence and do event planning.
  8. Be pro-active and responsive in planning ahead. Ask what is our action plan for risks and opportunities to the latest forecast.
  9. Manage by Exception! 20% of your products and customers drive 90% of your revenues, sales volume and profits. The 90-20 rule.
  10. If you have a choice, KNOW the future, so you don’t have to forecast it!
    Continue reading on DemandPlanning.net!