Consensus Based Forecasting

Popular Misconceptions

Consensus based forecasting has been around for some time, however,  it in general is not implemented very well. The concept fo consensus based forecasting, as understood by many, is that the process is simply collecting forecasts from a number of sources and then tabulating the results. Why this conception should be the case is unnecessary because this is not the way that experts in the field propose that consensus based forecasting to work.

Increased Popularity

Currently, the pendulum of popularity is swinging or has swung to consensus based forecasting (and away from statistical forecasting). One of the major issues is that companies continue to use promotions and to fail to limit the manual overrides to the forecast, and thus are perpetually unsatisfied with their forecast. Most sources state that it is extremely unusual for a company to have an average SKU level forecast higher than 70%, and this continual dissatisfaction leads to the development of different trends of popularity within the industry. Now that the pendulum is moving in the direction of consensus based forecasting it is more important than ever that it actually be done correctly.

Selecting Your Solution

As a practical matter, it is possible to perform consensus based forecasting with no tool whatsoever, and for the various forecast SMEs to simply submit their forecasts via a company created portal or by spreadsheet. When trying to perform consensus based forecasting in the major SAP ERP or even SAP DP, its clear that this would be a very onerous task. For this reason we recommend looking at one of the collaborative or predictive markets based forecasting solutions. However, the software is only part of the answer…

A Disciplined Approach

A big part of implementing a successful consensus based forecasting project is implementing the right software with a disciplined approach to how the input forecast drives the actual final consensus based forecast, and how this is connected to the statistical forecast. I can work though all of this with you at a very reasonable cost. I am familiar with the major applications in this space as well as the consensus based forecasting success requirements. Contact us to find out more. There are a number of exciting things afoot in predictive markets and a number of innovative ways of approaching consensus based supply chain forecasting.