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By Laton McCartney
The current economic slump leaves little or no margin for guesswork and/or error. As a result, companies are seeking to improve their business forecasting capabilities today and re-evaluating existing demand-driven-planning and forecasting implementations, AMR Research claims. Increasingly, AMR asserts, "demand-planning applications with innovative new capabilities, such as attribute-based forecasting, direct ties into sales and operations planning processes and integration of downstream data are driving market demand."
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On June 3, SAS Institute, a leading business intelligence and predictive analytics software provider, rolled its version of demand driven applications: SAS Demand-Driven Forecasting (DDF). SAS claims the new forecasting solution automatically tracks variations between forecasted and actual numbers to guide the sales and chain operations planning process.
To find out more about the product and increasingly important field of analytic-based forecasting, CIOZone talked to Charlie Chase, formerly global strategist for analytics at SAS and currently the business enablement manager for SAS's Manufacturing and Supply Chain Global Practice.
CIOZone: What is demand-driven forecasting and how does it differ from forecasting solutions that are currently on the market?
Chase: Demand-driven forecasting is a new forecasting solution that's more accurate than traditional ERP/SCM systems (enterprise resource planning/ supply management). It combines powerful analytics and business intelligence. It also allows users to respond profitably to demand using "what if" analyses and scenario modeling to measure the financial impact of changes in marketing strategies or product mix and support sales and downstream planning.
CIOZone: So it's tied to sales?
Chase. It integrates customer and other upstream data into a demand plan that helps maximize profits and market share.
CIOZone: Are you primarily targeting the manufacturing industry and supply chain management with this?
Chase: Well, global manufacturing is my area so that was a primary target, but we've already signed on 14 customers. A number of them are manufacturers, but we've also gotten commitments from a number of non-manufacturers as well, including a global retailer, a telco company and an automotive company.
CIOZone: So it's applicable to other industries as well. Do you have to customize DDF to suit the requirements of different industries?
Chase: We don't customize. SAS is like a Lego system. We use a common platform and then bundle the needed components together that suit the customer's needs. That provides greater flexibility and quick implementation. There's virtually no customization. It's not needed.
CIOZone: Has there been a tipping point in terms of the acceptance of demand planning and forecasting. AMR is projecting that forecasting will amount to 12% of all supply chain management application spending through 2011.
Chase: In a recession, particularly, it's essential that companies improve the accuracy of forecasting across all functional areas: lost sales, budget-allocations, product obsolesce, overstocks and higher prices. It's also vital to understand what the total market size is and where the opportunities are.
CIOZone: Where does the CIO figure in all of this?
Chase: Today you've got different departments—marketing, sales, and production—doing their own forecasting. With a common platform, such as SAS provides, you can ensure that the entire organization is basing its forecasting on the same data and that data in accessible throughout the enterprise. You eliminate silos and the cost of ownership. Providing the technical architecture to accomplish this is the domain of the CIO.
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