The Optimal Sales and Operational Forecasting and Collaborative Process Solution
FUTURCAST is a sales and operational forecasting and collaborative reporting software that provides excellence in managing value for an organization. As Figure 1 displays, it is sales driven and designed to establish a unique, transparent forecast that accurately plans production and distribution, and determines financial expectations.
FUTURCAST is an artificial intelligence system that is based on a tradition of academic knowledge coupled with over 30 years of experience of forecasting sell-in/sell-out product sales in all industries. It filters data, uses pattern recognition principles and selects the best methodology to statistically forecast the filtered data. It has evolved from a PC application package to a fully integrated enterprise software, making use of the MS SQL or Oracle database environments for collaborative and event-based forecasting to meet operational excellence. It enables users to modify forecasts in volumes and/or values at any aggregate level of a product hierarchy with the system automatically calculating the required units at the lowest level.
FUTURCAST is continuously upgraded to meet the changing supply chain needs of manufacturing organizations. It supports the growing demand for weekly forecasting, optimal replenishment, daily consumption analysis and integrates a high-level S&OP platform for balancing supply and demand.
The FUTURCAST System
Figure 2 illustrates the FUTURCAST Sales and Operational Forecasting and Collaborative Process and its components. In Figure 2, we see that FUTURCAST’s forecasting activities are not performed in isolation of the ERP solution. New sell-in and/or sell-out input data are required on a periodic basis (daily, weekly, or monthly) and the forecast output needs to be transferred in order to become the driving input for manufacturing, distribution, budgeting and other planning activities.
The Essence of Collaborative Forecasting Solutions
Collaborative forecasting solutions are best suited for companies selling products that a remote sales force and account managers drive. For such companies, it is of critical importance to capture the changes that may affect product sales in the near term from sources that are closest to the customer (i.e. distributors, agents, wholesalers, retail accounts, etc.). Not only is it important to have the right products at the right time, it is also critical that they are at the right place. Collaborative forecasting tends to put emphasis on the “right place” since, from a technical standpoint, the forecasts are generally established at ship-to/point-of-sales locations. The main objective of collaborative forecasting is to reduce short term customer inventory levels and improve distribution efficiency.
Without a collaborative process, forecasting would be analogous to driving a car with both eyes looking into the rear-view mirror.
Key Characteristics of the FUTURCAST Sales and Operational Forecasting and Collaborative Process
The five key characteristics of the FUTURCAST process and system are marketing and sales/account management and/or distributor’s collaboration, an expert forecasting engine, bird’s eye executive reporting, Sales and Operations support views, and enterprise application integration coupled with on-going accuracy monitoring.
Sales/Account Management Weekly and/or Monthly Ship-to/Point-of-Sales Forecasts
FUTURCAST’s principal objective is to provide supply chain management with fact-based information to improve planning accuracy weekly and/or monthly. Managers are eager to find out what happens to product sales at various locations, in order to better assess underlying risks and opportunities. They want to know the reasons behind the forecasts and their impact on the future.
FUTURCAST delivers, through standard and custom designed web-enabled tools, the sales demand forecast for the coming weeks and future months and the associated market reasons for the changes made to the forecasts. It offers sales/account managers the ability to collaborate and elaborate, from a unique base, the sales and operational, financial, supply chain and strategic plans; each plan representing a different set of reasons and/or impacts.
Expert Forecasting Engine
The forecasting engine is the motor of the forecasting system. Its main purpose is to analyse historical data in order to generate the base forecast. The base forecast is the benchmark or point of reference from which all forecast modifications through collaboration are made. The more accurate the base, the fewer manual overrides are required to correct it.
Five dimensions can be used to rate the performance of a forecast engine. They are:
|1||Type||objective vs. subjective|
|2||Horsepower||statistical vs. non-statistical|
|3||Class||extrapolative vs. causal|
|4||Method||single vs. multiple|
|5||Selection||best fit vs. expert system|
FUTURCAST’s engine attains the highest THCMS rating. It is classified as objective, statistical and extrapolative; it uses multiple methods and incorporates an expert system selection process. By definition, an expert system will reproduce how a person with great knowledge and skills in statistical forecasting would go about making decisions as to which method to use. An expert will first look at the data after having filtered outliers, then identify the first observation to be used, and depending on the trend-cycle pattern visually observed, it will then choose among a small select set of methods the most appropriate one to apply. This process corresponds to the automatic expert system which is incorporated in the FUTURCAST multiple methods forecast engine.
Bird's Eye View Executive Reporting
Reporting is an essential function of a forecasting system. The purpose is to provide senior managers with a “bird’s eye view” of business performances for both historical, forecast and budget data and to provide drill-down and slice-and-dice functionalities to identify and assess “best” and “worst” performances, risks and opportunities.
FUTURCAST EASY on the Web OLAP reporting tool allows one to quickly query the database and produce “on the go” top-line macro, detailed micro, budget gap, year-to-date performance, perspective, and price/volume/exchange rate reports and analyses.
Consumption and Sales and Operations Support Views
The FUTURCAST forecasting application allows the user to balance supply side information (in-stock and in-transit inventories, anticipated production volumes, month-to-date sales, backorders, etc.) with the forecast demand signal in order to sign off the forecast with confidence. Moreover, given minimum order quantities, lead-times and safety-stocks, the best replenishment quantities may be established to determine future orders and avoid costly stock-outs.
On-going Accuracy Monitoring
FUTURCAST’s method of monitoring accuracy is the evaluation function of the system. It consists of several user-customized and pre-defined reports that are used to compute key performance process indicators. Its purpose is to measure forecast accuracy and stability and to provide the owners of the forecast with the necessary feedback for assessing and reviewing their future expectations.
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