How to improve tactical product/market forecasting estimates. What are some techniques used in your company, with your portfolio?

1. Best Practices in Demand Forecasting CHARLES DIMOV CDIMOV@HOTMAIL.COM OR FIND ME ON lINKEDiN

2. Operate Efficiently & Effectively Companies must understand Supply & Demand constraints Accurate Forecasts Prepare for resource needs Prepare for structural evolution Invest right amount of Capital at right time Win in Market! Why?

3. OverSupply: Depreciating resources Obsolescence Overstaffing Excess Inventory Affects Price Drives Promo addiction Erodes Product Value Erodes Brand Value Wrong Forecast COGS ↑ Cash Flow Tied ROA ↓ GM ↓ Contribution Margin ↓ Acid Test Score ↓ Viability of Company ↓

4. UnderSupply: Product Shortages Lost Sales Price ↑ Brand Promise ↓ Bad PR Customer Confidence ↓ Months to recover in Supply Chain Wrong Forecast Market Share ↓ Lost Revenue Opp. Earnings ↓ P/E (not optimal) Lost Market Position Competitor Wins

5. To Avoid This Forecast… Image by: Iam Wahid (16Jul2009)

6. Historics Analysis Triangulate EyeBall Feedback Forecast Approach

7. Whenever possible – use HISTORICAL DATA For NPI – use closest HISTORICAL DATA “Study History or be doomed to repeat it” Brother LomanLavigne First Principle Time variability, and scale

8. Analysis: Seasonality Trend 1 Economic Cycle Cycle 1 Year Seasonality

9. Excel / Systat / SPSS / SAS / MiniTab Descriptive Statistics to show boundaries Analysis: Statistics B A NOTE: Watch the STD Deviations

10. Many S/W Tools Expert System chosen models Lowest MAD (Mean Absolute Deviation) Export to Excel Can be a Dead Simple Process Analysis: Forecast Tools

11. Forecast Pro $1,295 - $8,995 US www.forecastpro.com Vanguard www.vanguardsw.com DemandWorksSmoothie $500 - $6,000 US www.demandworks.com SAS www.sas.com Analysis: Forecast Tools

12. CrowdSourcing: “under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them.” p.xi Introduction, Wisdom of Crowds, James Surowiecki. Analysis: CrowdSourcing ???

13. No one model will be accurate every time Forecasting is inexact Dark-Art / Science Provides General Guidance on direction and magnitude Triangulate -Seasonality Est. -Forecast Tool Est. X -Channel Est. -Sales Funnel -Supply Constraint -CrowdSource

14. Product / Marketing Mgr Smarts / Heuristics Eyeball Major DM + Ad Campaign + Promotional Offer Version 2 Pre-Anounce will stall sales – B4 general availability

15. Product / Marketing Mgrs Pricing Model changes Promotional Offers Marketing Campaigns Discounting changes Brand effects Bankruptcies / New entrants Competitive Analysis Market Conditions Major Events Reduced Defects Eyeball New Channel Partners Distribution Model Disruptive Technology Chg Market Preference shift Manufacturing capacity Market Share expectations Global Events Economic Cycle effects Inventory Returns Other Factors

16. Every Quarter – check Forecasts vs Actuals Focus = biggest deviation Tweak Model Do it again! Feedback Loop

17. Summary Historics Analysis Triangulate EyeBall Feedback Image by: CobraSoft

18. Books: Not found a practical book Websites: www.ibf.org (not s/w specific) (discussion forum) Article: TPMA Focus 3Q11 More on Forecasting