What is Consensus Forecast

8/9/2019 What is Consensus Forecast

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What is consensus forecast?how its used?what are the FORECAST models invovled

in?

Answer

# 1Consensus forecast refers to a businessprocess, not asystem function. It basically means forecast

created withthe mutual agreement of the variousbusiness functions,e.g. supply chain, finance, sales, etc.

As such it is not linked to any statisticalforecast models(I assume you meant that) and you can useany and allmodels, it will not create a consensusforecast for you.You have to take your numbers and discuss

and agree aboutthem with your colleagues of the differentdepartments.

hat!s what will make your forecastconsensus based.

Is This Answer Correct ? 15 Yes 1 No

Lova

Re! What is consensus forecast?how its used?what are the FORECASTmodels invovled in?

Answer# " In simple consensus forecast is arriving anaverage figures

by taking eg.. production forecast "ty,marketingforecasting "ty and planned "ty.. and so on..

#g. $roduction forecast%&'' nos. arketingorecas "ty%&*',

you can arrive the consesus forecast "ty is&&*"ty.

I hope this will help you..+ A #-A$ #/ 01+2A1 C+3 41 I30#56IC# ,A$ #/70 AI1.C+

888. A$ #/.C+

Mohammed
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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. Amongdifferentbusiness unit which are responsible forforecasting.

A$+ gives fle9ibility with providing variousforecastmodels. hese are:. 4nivariate:.:. oving Average:.&. #9ponential moothing:.;. easonal&. Causal&.:. ultiple 1inear regression;. Composite;.:. 8eighted average

You can employ these models while definingmultiple planningbooks and prepare forecast. 3e9t you deliver these modelingresults to


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Consensus-Based Forecasting

PurposeForecasters from di erent areas or departments have di erent business goals and thereforedevelop forecastssuch as the Strategic Business Forecast, the Tactical Sales Forecast andthe Operational Supply Chain Forecastaccording to their own aggregation levels, ey!gures, time hori"ons, and so on# For e$ample, the mar eting department focuses on brandor product group level and considers promotions in a medium term planning hori"on, whilethe sales department forecasts for ey customers and mar ets#Consensus%based forecasting is a method that combines these di erent time hori"ons andforecasting levels from an organi"ational as well as from a tool perspective# Once all theparties involved in the demand planning process within a company have come up with theirown individual forecasts, a consensus meeting is held# The result of this meeting is anoverall demand plan that ta es into account the business goals of all departments# Theagreed demand plan is accepted by all parties# &oreover, all parties feel responsible for thisdemand and identify themselves with the output# 'i erent demand streams get combinedinto (one !gure(#

Prerequisites)very party and department that is involved in the demand planning process has alreadycreated its own forecast* that is, sales people have de!ned a sales forecast based on ey

accounts, the mar eting department has pro+ected the impact of promotions, and so on#

Process Flow The following process ow describes one e$ample of how consensus%based forecasting canbe handled in the -.O system#

/# 'epartment%speci!c forecasts are created in separate ey !gures of the sameplanning area and the same version#

The following departments are involved in the demand planning process and deliver

a forecast driven by the following factors0 Sales department

The forecast is created for a combination of product and customer# 1t relates tothe sales budget#2aive methods and +udgmental forecasting are used#

The sales forecast focuses on trade promotions, orders, syndicated .OS data,competitive information, and customer information#


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The goals of the sales department are tactical0 to ma$imi"e sales and targetactual customer demand# Thus, the sales forecast is pro!t%oriented#

3ogistics department The forecast is created for a combination of product4item and location on S56level#

The forecast is history%based# Time series models and other models are used#)$pert nowledge is also integrated#

The logistics forecast focuses on shipments, promotions, and material andcapacity constraints imposed by suppliers and4or internal productionconditions#

The goals of the logistics department are operational0 to minimi"e productionand sourcing costs, and at the same time ful!ll production orders and salesorders#

&ar eting department The forecast is created for a combination of brand4product family and mar et

"one#Sophisticated models and causal analysis are used# The mar eting forecast focuses on events and promotion calendars, causalrelationships, and syndicated .OS data#

The goals of the mar eting department are strategic0 to increase demandvolume, set demand streams, and bring stoc or unused capacitiy to mar etthrough promotional activities#

/# - team meeting is held and a consensus is reached# The di erent parties involved in the demand planning process come together in a consensusmeeting# The di erent forecasts are automatically aggregated and can be viewed on anylevel in the demand planning data mart# - specially designed consensus planning boo isused for this purpose# The forecasts of the di erent departments are stored in separate ey!gures#1t contains the following time speci!cations0

.lanning hori"on Short to medium term/ to 7 wee s 4 8 months

Buc ets 'ays

Fre9uency Once a wee

1t contains rows for the forecasts of each department# &anual changes can be made to these

rows# The di erent parties discuss their point of view and, where necessary, ma e manualchanges directly in the consensus planning boo #-nother row in the planning boo re ects the consensus forecast# 1t amalgamates thedepartmental forecasts# The numbers in this row are derived automatically using a specialmacro# This macro might calculate the average of the individual forecasts# -lternatively, itmight weight the forecasts of each department di erently#

The consensus forecast represents the agreed demand within a speci!c time hori"on thatwill be released to and used by S2. for concurrent planning#


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he accuracy of the forecast is checked against actual sales data.:here necessary, ad+ustments are made to the forecast models and4or to the macro#

Result The result of consensus%based forecasting is a one%number demand plan that has beenagreed to and is owned by all sta eholders#

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What is Consensus Forecast