"We see a lot of companies using Excel as their forecasting tool," he said. "We hear stories of companies spending two to three months manipulating data. There's not much time for analysis."
The need for more detail in forecasting is driven by huge variability in demand, especially among big retailers. Their ever-changing needs "can really blow the forecast," Leonard says. It's critical that companies identify the source of the variation at the customer level.
The profile of a forecaster today is markedly different from the past. The individual has to be comfortable with numbers yet also have good business judgment, Leonard says. In many companies, forecasting responsibility falls on a particular individual's shoulders "by default." That person might be a manufacturing engineer who has done some statistical process control. In other organizations, he or she might be a finance specialist. "You go into a room full of forecasters and ask how many went to school deciding that they wanted to be a forecaster," says Leonard. "Not many will raise their hands."
At the very least, says Leonard, all of the individuals responsible for the forecast need to show up at meetings. "Everybody has important input," he says. "Most of the time, the math isn't necessarily going to get it right." Good judgment and interaction with customers must supplement hard numbers.
Leonard is optimistic about the ability of companies to get their houses in order, from a forecasting standpoint. "Companies of all sizes are elevating the forecasting function," he says.
