The business forecasting deal : exposing myths, eliminating bad practices, providing practical solutions

275 Pages·2010·4.619 MB·English

by  Gilliland, Michael

– continued from front flap – Praise for G
$49.95 USA / $59.95 CAN
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Written in a nontechnical style, this book provides l
l
THE BUSINESS FORECASTING DEAL i
practical solutions to a wide variety of business l
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forecasting problems. It illustrates a new way to
Exposing Myths, Eliminating Bad Practices, Providing Practical Solutions n
think about business forecasting in the context of d THE
uncertainty, randomness, and process performance, “Mike Gilliland’s new book is a breath of fresh air. It’s simple, straightforward, easy to read, BUSINESS
all within the internal political arena in which real- insightful—and loaded with solid, practical advice on how to improve the forecasting process in T
FORECASTING
life forecasting is conducted. While there is no magic your company.” H
formula to guarantee perfect forecasts, this book —From the Foreword by Tom Wallace E DEAL

will change your perspective—and improve your B
“Into a market awash in forecasting texts, each promising to be the panacea for supply chain
success—in dealing with the problems of business
U Exposing Myths, Eliminating Bad Practices,
ineffi ciencies and sales shortfalls, Mike Gilliland’s The Business Forecasting Deal is a refreshingly
forecasting. Providing Practical Solutions
objective assessment of the real costs and benefi ts of forecast process improvement. Above all, his S
book cuts to what should be at the heart of all our efforts: are the expenditures in time and money I
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we are making in forecast improvement truly resulting in incremental profi tability?” Business forecasting is the ultimate no-win game.
—Jonathon Karelse, National Marketing Manager, Yokohama Tire (Canada) Inc. E You’re almost always wrong—except on those
S rare, random occasions where actual sales come in
MICHAEL GILLILAND is Product Marketing “A great book, unique as well. Mike Gilliland is the fi rst person with a mission to bring ‘worst S exactly on forecast—and you get beat up routinely
practices’ into the open so that forecasters can see what they are doing wrong and the price they
Manager at SAS Institute and has worked in consu- for your “lousy forecasts.” Against this framework,
are paying for it. Nothing can happen unless they recognize their problems, for which Mike has F
mer products forecasting for more than twenty years. The Business Forecasting Deal turns forecasting on
made a tremendous contribution.” O
Prior to joining SAS in 2004, Mike held forecasting THE its head. Instead of focusing solely on statistical
—Dr. Chaman Jain, St. John’s University; Editor, Journal of Business Forecasting
management positions in the food, electronics, and R modeling and forecast accuracy—accuracy being
apparel industries and served as a consultant. He is “Mike Gilliland has captured the key issues in this book, and his work, particularly on volatility largely determined by the nature of the demand
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a frequent speaker at industry events, has published and Forecast Value Added, is to be applauded.” BUSINESS you are trying to forecast—Michael Gilliland turns
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articles in Supply Chain Management Review, —Martin Joseph, Managing Director, Rivershill Consulting Ltd. your attention to forecasting process effi ciency and
Journal of Business Forecasting, Foresight, and APICS A effectiveness. His unique perspective, utilizing the
“I have used Mike Gilliland’s Forecast Value Added (FVA) analysis for the past year, and it has
magazine, and was a columnist on “Worst Practices S emerging method of Forecast Value Added (FVA)
made a big difference in understanding what steps in our forecasting process are worthwhile and
in Business Forecasting” for Supply Chain Forecasting T analysis, shows how organizations can meaningfully
what steps need to be improved or eliminated. His advice on the proper way to present FVA to FORECASTING
Digest. Mike holds a BA in philosophy from Michigan I improve their performance by eliminating the “worst
upper management has helped gain the confi dence of the division in this analysis.”
State University, and master’s degrees in philosophy N practices” that now sabotage and confound their
—Dave Wehling, Manager, Marketing Requirements, International Division,
and mathematical sciences from Johns Hopkins forecasting efforts.
G
The Toro Company
University. Follow his blog, The Business Forecasting

Deal, at blogs.sas.com/forecasting. “Mike Gilliland provides a unique perspective on the forecasting discipline. He presents sound D DEAL While predicting the future is a very diffi cult thing,
quantitative lessons paired with pragmatic, realistic, and effective methodologies for applying there is no shortage of articles, books, consultants,
E
his techniques. This book is an excellent and perhaps mandatory addition to the repertoire of and even software vendors willing to tell you (or
A
demand managers and supply chain management professionals alike.” sell you) their version of forecasting best practices.
—Emily Rodriguez, Supply Chain Program Manager, Intel Corporation L However, many of these purported “best practices”
do not work—they fail to make the forecast any
better. Through FVA analysis—a method that
Jacket Design: Michael Rutkowski
Exposing Myths, Eliminating Bad Practices,
has been employed at several major corporations
Cover Illustration: Jessica Crews
including Intel, AstraZeneca, Cisco, and Yokohama
Providing Practical Solutions
Tire (Canada)—The Business Forecasting Deal shows
how to identify the waste and ineffi ciencies in the
typical forecasting process. By eliminating those
The Wiley and SAS Business Series
(surprisingly common) practices that make the
presents books that help senior-level
managers with their critical forecast worse, FVA analysis is helping companies
management decisions Michael Gilliland get better forecasts with less effort and less cost.
– continued on back flap –

ADDITIONAL PRAISE FOR THE BUSINESS
FORECASTING DEAL
“This book is a must read for demand planning practitioners and
for organizational leaders and management dealing with demand
forecasting. The book lays out the problem defi nition and issues
dealing with forecasting, and provides a practical approach for imple-
menting the demand planning process.”
—Shashi Tripathi, Vice President Product Management,
AGNITY Healthcare
“We had a few ‘Aha!’ moments when we fi rst came across Mike
Gilliland’s work through webinars and conferences. In this book,
Mike compiles and shares his insights of the realities of business fore-
casting and provides recommendations on how to navigate them.
Some highlights:
(cid:2) Managing forecast accuracy expectations.
(cid:2) Streamlining existing forecasting processes using Forecast Value
Added (FVA) methodology.
(cid:2) Identifying erroneous “best practices” that contribute to fl awed
approaches.
The Business Forecasting Deal is well-written, easy to understand, and
intuitively appealing not only to practitioners but their business part-
ners as well. A must-read!”
—Kean Chew, Demand Planning Senior Manager & Brad Ragland,
Demand Planning Team Leader, HAVI Global Solutions
“This book effectively addresses the frequent challenge of understand-
ing and communicating the limitations of forecasting. I have learned
to view a forecast as a risk management tool, but it can only be used
to the fullest when we are able to leverage the forecast to make the
best supply chain decisions. Mike Gilliland has identifi ed ways for
corporations to become more knowledgeable about their performance,
be better equipped to manage expectations, and shown how to
improve forecast results where opportunities exist. This is an exciting
read for me as we are on the cusp of implementing a forecastability
analysis, utilizing FVA to assess our performance. This book equips
me to educate both internal users (our analysts), as well as external
customers of the forecast on this new information.”
—Mark Hahn, Manager—Sales Forecasting and Analysis,
Amway Corporation
“Truly exceptional in its simple and straightforward commentary on
forecasting as practised in several organizations. With valuable insights
on how to get the ‘bang for the buck’ in the intriguing world of busi-
ness forecasting and suggestions to improve the quality of forecasts,
the book is a must-read for all those involved in forecasting function
and responsible for supply chain effectiveness in organizations.”
—Suren Palakkal, Senior Solution Consultant,
MEB Consulting LLC, USA
“Insightful, entertaining, and a must for all planning professionals.
Mike Gilliland is able to take complex concepts and theories and
describe them for all to understand. This book should be read by
planners and executives.”
—Mary Côté, Senior e-Business Consultant,
DeltaWare Systems Inc.
The Business
Forecasting Deal
W & S AS B S
ILEY USINESS ERIES
The Wiley & SAS Business Series presents books that help senior- level manag-
ers with their critical management decisions.
Titles in the Wiley and SAS Business Series include:
Activity- B ased Management for Financial Institutions: Driving Bottom- L ine
Results by Brent Bahnub
Business Intelligence Competency Centers: A Team Approach to Maximizing
Competitive Advantage by Gloria J. Miller, Dagmar Brautigam, and
Stefanie Gerlach
Business Intelligence Success Factors: Tools for Aligning Your Business in the
Global Economy by Olivia Parr Rud
Case Studies in Performance Management: A Guide from the Experts by
Tony C. Adkins
CIO Best Practices: Enabling Strategic Value with Information Technology by
Joe Stenzel
Credit Risk Assessment: The New Lending System for Borrowers, Lenders, and
Investors by Clark Abrahams and Mingyuan Zhang
Credit Risk Scorecards: Developing and Implementing Intelligent Credit Scoring
by Naeem Siddiqi
Customer Data Integration: Reaching a Single Version of the Truth by Jill Dyche
and Evan Levy
Demand- D riven Forecasting: A Structured Approach to Forecasting by
Charles Chase
Enterprise Risk Management: A Methodology for Achieving Strategic Objectives
by Gregory Monahan
Fair Lending Compliance: Intelligence and Implications for Credit Risk Management
by Clark R. Abrahams and Mingyuan Zhang
Information Revolution: Using the Information Evolution Model to Grow Your
Business by Jim Davis, Gloria J. Miller, and Allan Russell
Marketing Automation: Practical Steps to More Effective Direct Marketing by
Jeff LeSueur
Mastering Organizational Knowledge Flow: How to Make Knowledge Sharing
Work by Frank Leistner
Performance Management: Finding the Missing Pieces (to Close the Intelligence
Gap) by Gary Cokins
Performance Management: Integrating Strategy Execution, Methodologies, Risk,
and Analytics by Gary Cokins
The Data Asset: How Smart Companies Govern Their Data for Business Success
by Tony Fisher
The New Know: Innovation Powered by Analytics by Thornton May
Visual Six Sigma: Making Data Analysis Lean by Ian Cox, Marie A. Gaudard,
Philip J. Ramsey, Mia L. Stephens, and Leo Wright
For more information on any of the above titles, please visit www.
wiley.com .
The Business
Forecasting Deal
Exposing Myths, Eliminating
Bad Practices, Providing
Practical Solutions
Michael Gilliland
John Wiley & Sons, Inc.
Copyright © 2010 by SAS Institute, Inc. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data
Gilliland, Michael.
The business forecasting deal : exposing the myths, eliminating bad
practices, providing practical solutions / Michael Gilliland.
p. cm.
Includes bibliographical references and index.
ISBN 978-0-470-57443-0 (cloth)
1. Business forecasting. I. Title.
HD30.27.G55 2010
658.4′0355—dc22
2010007796
Printed in the United States of America
10 9 8 7 6 5 4 3 2 1
To my parents, Dennis and Joan Gilliland —
much nicer people than I am.