What is consensus forecast?how its used?

what are the FORECAST models invovled

in?
Answer Consensus forecast refers to a business
0
Lova
# 1 process, not a
system function. It basically means forecast
created with
the mutual agreement of the various
business functions,
e.g. supply chain, finance, sales, etc.
As such it is not linked to any statistical
forecast models
(I assume you meant that) and you can use
any and all
models, it will not create a consensus
forecast for you.
You have to take your numbers and discuss
and agree about
them with your colleagues of the different
departments.
That's what will make your forecast
consensus based.
15 Yes
1 No
Is This Answer Correct ?

Re: What is consensus forecast?how its used?what are the FORECAST

models invovled in?
Answer In simple consensus forecast is arriving an
0
Mohammed
# 2 average figures
by taking eg.. production forecast qty,
marketing
forecasting qty and planned qty.. and so on..
Eg. Production forecast:200 nos. Marketing
Forecas qty:250,
you can arrive the consesus forecast qty is
225qty.
I hope this will help you..
MOHAMMED
SAPTEQ GLOBAL CONSULTING
SERVICES,
SAPTEQ@GMAIL.COM
WWW.SAPTEQ.COM

Is This Answer Correct ?

2 Yes

1 No

Re: What is consensus forecast?how its used?what are the FORECAST

models invovled in?
Answer As the word says it...its a consensus. Among
# 3 different
business unit which are responsible for
forecasting.
APO gives flexibility with providing various
forecast
models. These are
1. Univariate
1.1. Moving Average
1.2. Exponential Smoothing
1.3. Seasonal
2. Causal
2.1. Multiple Linear regression
3. Composite
3.1. Weighted average
You can employ these models while defining
multiple planning
books and prepare forecast. Next you deliver
these modeling
results to S&O team, Management to decide
the suitability.
You may also want to include external factors
like new
product launch or seasonal product
promotions to be included
in the forecast model. After all this
brainstorming you
arrive at one final approved plan which your
company will use.
Hope this helps.

Consensus-Based Forecasting
Purpose
Forecasters from different areas or departments have different business goals and therefore
develop forecastssuch as the Strategic Business Forecast, the Tactical Sales Forecast and
the Operational Supply Chain Forecastaccording to their own aggregation levels, key
figures, time horizons, and so on. For example, the marketing department focuses on brand
or product group level and considers promotions in a medium term planning horizon, while
the sales department forecasts for key customers and markets.
Consensus-based forecasting is a method that combines these different time horizons and
forecasting levels from an organizational as well as from a tool perspective. Once all the
parties involved in the demand planning process within a company have come up with their
own individual forecasts, a consensus meeting is held. The result of this meeting is an
overall demand plan that takes into account the business goals of all departments. The
agreed demand plan is accepted by all parties. Moreover, all parties feel responsible for this
demand and identify themselves with the output. Different demand streams get combined
into "one figure".

Prerequisites
Every party and department that is involved in the demand planning process has already
created its own forecast; that is, sales people have defined a sales forecast based on key
accounts, the marketing department has projected the impact of promotions, and so on.

Process Flow
The following process flow describes one example of how consensus-based forecasting can
be handled in the APO system.
1.

Department-specific forecasts are created in separate key figures of the same

planning area and the same version.
The following departments are involved in the demand planning process and deliver
a forecast driven by the following factors:
Sales department
The forecast is created for a combination of product and customer. It relates to
the sales budget.
Naive methods and judgmental forecasting are used.
The sales forecast focuses on trade promotions, orders, syndicated POS data,
competitive information, and customer information.

The goals of the sales department are tactical: to maximize sales and target
actual customer demand. Thus, the sales forecast is profit-oriented.
Logistics department

The forecast is created for a combination of product/item and location on SKU

level.
The forecast is history-based. Time series models and other models are used.
Expert knowledge is also integrated.
The logistics forecast focuses on shipments, promotions, and material and
capacity constraints imposed by suppliers and/or internal production
conditions.
The goals of the logistics department are operational: to minimize production
and sourcing costs, and at the same time fulfill production orders and sales
orders.
Marketing department

The forecast is created for a combination of brand/product family and market

zone.
Sophisticated models and causal analysis are used.
The marketing forecast focuses on events and promotion calendars, causal
relationships, and syndicated POS data.
The goals of the marketing department are strategic: to increase demand
volume, set demand streams, and bring stock or unused capacitiy to market
through promotional activities.
1.
A team meeting is held and a consensus is reached.
The different parties involved in the demand planning process come together in a consensus
meeting. The different forecasts are automatically aggregated and can be viewed on any
level in the demand planning data mart. A specially designed consensus planning book is
used for this purpose. The forecasts of the different departments are stored in separate key
figures.
It contains the following time specifications:
Planning horizon

Short to medium term

1 to 4 weeks / 3 months

Buckets

Days

Frequency

Once a week

It contains rows for the forecasts of each department. Manual changes can be made to these
rows. The different parties discuss their point of view and, where necessary, make manual
changes directly in the consensus planning book.
Another row in the planning book reflects the consensus forecast. It amalgamates the
departmental forecasts. The numbers in this row are derived automatically using a special
macro. This macro might calculate the average of the individual forecasts. Alternatively, it
might weight the forecasts of each department differently.
The consensus forecast represents the agreed demand within a specific time horizon that
will be released to and used by SNP for concurrent planning.

 The accuracy of the forecast is checked against actual sales data.

Where necessary, adjustments are made to the forecast models and/or to the macro.

Result
The result of consensus-based forecasting is a one-number demand plan that has been
agreed to and is owned by all stakeholders.