Always wrong!
Damn sales forecast!
And take break!
Damn sales forecast!
And take safety stock!
Damn sales forecast!
In recent months, participating in meetings with companies from different sectors, on the most varied topics and with participants from different hierarchical levels, I have heard recurrently, complaints and accusations against the company that seems to be the only one to blame for the difficulty in serving the market and high operating costs: the sales forecast!
The accusations are so many, and increasingly emphatic, that I have been remembering the song a lot Geni and the Zeppelin, by Chico Buarque de Holanda, whose chorus is:
Throw rocks at Geni!
Throw rocks at Geni!
She is made to catch!
She's good to spit!
She gives it to anyone!
Damn Geni!
The wish is always the same: a magical and savior mathematical model, capable of meeting future demand…and at the Customer-SKU level, please! In these meetings, almost always and unfortunately, I am the party pooper who has to say that this model does not exist and will not exist.
I do not deny that there are opportunities for improvement in the mathematical modeling of sales forecasts in most companies, but I am sure that it is not the only, much less the biggest, opportunity for improving demand service.
I hear very little questioning about the real reasons that lead to the increase in sales forecast errors and, consequently, to disruption problems and increased operating costs. Obviously, there are uncontrollable factors, such as weather conditions and unexpected actions by competitors, which impact accuracy and service, but there are many other points that could be discussed and improved.
For example, I see few discussions about portfolio management, a hugely complex factor for forecasting sales and sizing inventories, nor do I hear about the need for greater engagement by the commercial area in defining and executing plans, since it is directly responsible for much of the variability in demand behavior, or the need for the operations area to adequately quantify its reaction capacity.
It's always easier to throw rocks at Geni!
But this, unfortunately, will not solve the problem!
Leonardo Julianelli
https://ilos.com.brExecutive Partner of ILOS. Graduated in Production Engineering from EE/UFRJ, Master in Business Administration from COPPEAD/UFRJ with extension at EM Lyon, France, and PhD in Production Engineering from COPPE/UFRJ. He has several articles published in periodicals and specialized magazines, being one of the authors of the book: “Sales Forecast: Organizational Processes & Qualitative and Quantitative Methods”. His research areas are: Demand Planning, Customer Service in the Logistics Process and Operations Planning. He worked for 8 years at CEL-COPPEAD / UFRJ, helping to organize the Logistics Teaching area. In consultancy, he carried out several projects in the logistics area, such as Diagnosis and Master Plan, Sales Forecast, Inventory Management, Demand Planning and Training Plan in companies such as Abbott, Braskem, Nitriflex, Petrobras, Promon IP, Vale, Natura, Jequití, among others. As a professor, he taught classes at companies such as Coca-Cola, Souza Cruz, ThyssenKrupp, Votorantim, Carrefour, Petrobras, Vale, Via Varejo, Furukawa, Monsanto, Natura, Ambev, BR Distribuidora, ABM, International Paper, Pepsico, Boehringer, Metrô Rio , Novelis, Sony, GVT, SBF, Silimed, Bettanin, Caramuru, CSN, Libra, Schlumberger, Schneider, FCA, Boticário, Usiminas, Bayer, ESG, Kimberly Clark and Transpetro, among others.
