Meet forecaster in the field, Pete Alle, VP of Supply Chain at Oberweis Dairy. This interview originally appeared in the Summer 2015 issue of Foresight (issue no. 38).

How did you first get involved with forecasting?

My working career started in consulting, but then fairly soon moved into consumer products goods – specifically food. Here, I experienced firsthand the large swings in both real consumer demand and some “not so real” demand, such as meeting quarter-end goals through aggressive promotional activity.

As my career progressed, I came to lead Distribution in the Central U.S, including customer-demand planning. Here I saw not only the challenges in forecasting demand but also, significantly, the challenges for supply chain to respond to large swings in demand. I was struck by the huge opportunity to improve service, cost, and responsiveness, if only these elements could be made to work in a more coordinated fashion.

Subsequent roles exposed me to the powerful construct of S&OP. When executed well, I could see that this was business planning, bringing all the pieces together in a constructive way.

You don’t view forecasting as a stand-alone undertaking. Can you expand on that?

The art and science of forecasting are certainly critical elements of any well-run business; but where the power really comes from is the coupling of forecasting with a solid business planning process, under the umbrella of S&OP or Integrated Business Planning (IBP). Active participation by the business leadership team is critical to success as is effective planning of capacity and responsiveness. Capacity and demand planning at a sufficiently detailed level of granularity are essential to understand what the supply network must be able to respond to, given forecast error.

What are the people-side challenges of forecasting?

Forecasting requires technical skills but also a temperament that is not always easy to find. Great forecasters are comfortable working in the world of uncertainty, but the also summon all of the tools that are at their disposal.

Job satisfaction and job fulfillment are real concerns and can be undermined if leadership gets into the “blame game” of unloading responsibility for a poor forecast on the demand planner. Demand planning can be a rewarding experience if the planner is recognized as a valuable partner, and the responsibility of forecasting is shared with sales, marketing, and business leadership.

What are some of the ongoing challenges in the world of forecasting?

New products come to mind right away. In CPG, particularly in CPG food, new products are introduced on a regular basis. Some are smashing successes; others are bright, shooting stars for the first few months, then the novelty wears off. Still others can become solid citizens of the product portfolio, but won’t be the huge successes that marketing and sales were hoping for. This is what the forecaster has to deal with. One of the promising ways of responding is the use of point-of-sale data on a near real-time basis.

Another challenge lies in making better use of tools and techniques. We don’t pay enough attention to the use of an external assessment such as pricing actions by competitors, weather, changing consumer demographics, and the overall economic health of the targeted consumer. Also underused is internal assessment. This may sound peculiar, but it is vitally important to understand business plans to invest in a product, the degree of promotion, the price points, and more.

What do you do to relax?

I really enjoy getting outdoors and fishing or boating. There is nothing quite as relaxing as being on the water. It’s a great way to clear the mind and also to spend time with family and friends.

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