Despite the focus on customer collaboration and customer inputs, only 17 percent of respondents indicated that they forecast at the stock keeping unit (SKU), location and customer planning level. Given that a primary driver of demand volatility is increased customer requirements, Gartner analysts found it surprising that companies do not measure demand error down to the customer level as a means to better understand the sources of error — so that process and accountabilities can be improved. They also said that new product launch forecasting is overly reliant on sales and marketing for demand inputs. Opportunities exist to remove forecast bias by utilizing attribute modeling techniques and solutions that use similar product introductions to understand consumer/customer trial and repeat, as well as volume-build assumptions, to improve the forecast.
"Organizations should measure forecast accuracy at the item, location and customer level for forecast error understanding," Steutermann said. "Customer or sales forecast accuracy should be measured for continuous improvement and accountability. The appropriate place to measure for continuous improvement is in the sales and operations planning (S&OP) review process."
Additional information is available in the report: "Building an Effective Demand-Planning Process," which is available on Gartner's web site at http://www.gartner.com/resId=2085615.