The end-to-end planning chain is now

Nobody knows where the train is going, but those who have established a clean sales forecasting process have a clear advantage.

How will the economy develop over the next few months? Will market demand continue to stutter? Will we quickly return to pre-crisis levels? Nobody knows exactly how things will develop at the moment. Almost every piece of information from the media shifts the personal “feeling” for future developments on the market.

Statistics based on past values can hardly be relied on at the moment. What use is a sales forecasting process under these circumstances? I have been asked about this time and again since the start of the coronavirus crisis. However, I hear these questions almost exclusively from companies that do not have a clean sales forecasting process. The others will probably know what they have in their planning process.

A sales forecasting process consists not only of statistics based on historical data, but also of an end-to-end planning chain. Based on future expectations, requirements are planned consistently across the entire supply chain and replenishment is carried out accordingly. Relying on the gut feeling of individual planners when forecasting demand is already dangerous in normal times, but in the current phase it can be fatal. No one knows where the train will go, but it is precisely then that everyone must not follow their own feelings. Inconsistent expectations inevitably lead to an increase in stock levels and a simultaneous drop in delivery readiness. It is now important that the market expectations for the future are determined from a central point and then planned consistently, regardless of whether this central point is subsequently right or wrong. This only works if there is a continuous planning chain. If everyone on the boat adjusts their sails differently, soon nothing will move. If someone indicates where the wind will come from, the boat at least makes some headway.

But you should not underestimate even the statistics. During the last economic crisis in 2008/09, we found that statistics often reacted faster to market developments than human planners.

Copyright: Jakub Jirsak // Depositphotos #86049186

Picture of Prof. Dr. Andreas Kemmner

Prof. Dr. Andreas Kemmner

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