Best Practices: Cooking up a Fresher Demand Forecast at Tasty Baking Company

The iconic Philadelphia baker discovers the ROI in forecasting without bias.


Equally as important, Tasty Baking has realized a 16 percent reduction in its inventory of packaging and materials on hand as the improved forecast signals filter back into production planning and procurement. And the company has reduced its outages of packaging and ingredients by about 75 percent, according to Marthins' estimate.

Forecasting without Bias

Reflecting on the evolution of demand forecasting at Tasty Baking over the past three years, Marthins says that learning to trust that the forecast will prove accurate has required, at times, a difficult leap of faith. "Trusting the forecast isn't always the easiest thing," he says. "There have been some nights where I'm crossing my fingers and saying, 'Please come in.'" But perhaps the most important lesson, he notes, has been that demand planners must learn to "forecast without bias," that is, provide honest, accurate estimates rather than submit the numbers that they think senior management wants to see. "People didn't understand before what it meant if they gave us a bad forecast," Marthins says, "that if they called it too low, then we may not have a product to fulfill their order, or if they called it too high, we might wind up sending aged product."

Part of the culture change toward providing unbiased forecasts came with the institution of the monthly consensus meetings, which ensured senior management buy-in to the whole forecasting process and the importance of obtaining accurate projections. "The new management team understood that if you're forecasting under budget, that's the reality, and we need to use that time to react and do what we can to increase sales," the supply chain director says. "Getting everyone to accept the forecast for what it is, was huge."

Looking forward, Marthins says that Tasty Baking will continue to push for further increases in forecast accuracy and additional reductions in inventory. The company is adopting the Premium Edition of John Galt's solution, which will allow it to do forecasts at a hierarchy level, potentially driving further improvements in accuracy. Tasty Baking also is eyeing incorporating promotion planning and event management into its demand planning process.

The most surprising impact of moving to the new forecasting process, Marthins says, has been the way that the company's different functions have been able to come together around the "one number" consensus forecast. "I never expected that we would get to one set of numbers. Now the forecast comes out, it's reviewed and then everyone works off the same forecast. It's really broken down the silos and brought everybody together, and it really does help the business flow a whole lot easier."

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