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A guide to demand forecasting within the grocery industry

September 2000

Background
Collaboration between trading partners is rare
Demand drivers are generally not known or understood

Forecasts are often done only monthly


Forecasts are often different for sales and operations Forecast performance is not measured routinely

Objectives
An industry guide to demand forecasting
Easy to use Applicable across a variety of trading environments:
manufacturers, retailers and wholesalers large and small enterprises all grocery categories

Process
Nov 1999 Research
- Local - Global

Dec

Jan

Feb

Mar

Apr 2000

Case studies
- Sanitarium - P&G / Franklins

Content development
Industry workshops

Project Team
Paul Middleton - AFGC / Proctor & Gamble Daniel Kochanowicz - Woolworths

Mark McMahon - Unilever


Bob Boucher - Colgate Palmolive Gary Thomas - Parke-Davis Warner Lambert Peter Lord - Proctor & gamble Bill Barbour - Reckitt & Coleman Justin Golding - SC Johnson

Project Team
Sally Menzies - Carter Holt Harvey Steve Newton - Davids

Stephen Viles - CCA


Michael LaRoche - PWC Justin Greig - PWC Simon Coates - Franklins Peter Ryrie - Kimberly-Clark

The guide
Why should you use this guide?
A framework for demand forecasting Improving the forecasting process Developing the organisational capability Acquiring the right information technology Building collaborative partnerships Getting started

The levers of change


Increasing benefits
People Partnerships Increasing benefits

Increasing benefits

Technology Processes Increasing benefits

The maturity profile

Customer benefits

Supplier benefits

Segmentation
H

Demand variability

Economic value Volatile: Sophisticated techniques; frequent reviews

Stable: Less sophisticated techniques; less frequent reviews


Unimportant: Unsophisticated techniques; infrequent reviews

Improving the process


Supply chain management activities and time horizons
Demand and demand drivers

Demand forecasting units (DFUs)


Forecasting methods

Business and decision rules


Performance measures

Developing the capability


Roles and responsibilities
Structure Skills Incentives

Acquiring the right IT


Technology options
spreadsheets general statistical packages specialist forecasting packages enterprise resource planning packages (ERP) advanced planning and scheduling packages (APS)

Data integrity and standards Evaluating options


the top 10 questions to ask

The 4Cs of collaboration


Compatibility

Control

Collaborative partnership

Commitment

Capability

Recommendations
Segment products to determine forecasting processes
Develop forecasts collaboratively Suspend practices that obscure consumer demand signals Improve the integrity of data and use common data standards

Develop processes, people and technology


Use The Guide for improvement every step of the way!

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