CMAF FFT: What do we need to know about Forecast Value Added? by Robert Fildes and Mike Gilliland
Channel: Lancaster CMAF
Date: 2020-11-30

This is the fifth webinar in the series of "Friday Forecasting Talks", hosted by Centre for Marketing Analytics and Forecasting of Lancaster University, UK.
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-- Contents of this video --------------------------
00:00 - Introduction
02:20 - Mike Gilliland on Forecast Value Added Analysis
09:20 - Robert Fildes on What do we need to know about Forecast Value Added?
12:12 - What is Forecast Value Added
17:40 - Measuring Forecast Value Added
19:48 - Why do most organisations use FVA?
23:49 - Do judgmental adjustments add value?
29:19 - What goes wrong with adjustments?
33:01 - What we should know about FVA?
38:01 - Start of Q&A session
38:50 - What are the best practice for judgmental adjustments?
40:23 - The role of machine learning in the work of demand planners
44:48 - Comments on error measures
46:34 - Is it possible to measure the financial effects of different forecasts?
48:05 - Comments on making a lot of adjustments to different SKUs
50:59 - What about the impact of adjustments on uncertainty?
52:01 - Adjusting forecasts or models - what is better, what are the issues?
54:21 - What is the importance of forecast direction accuracy measures?
55:50 - Several levels of adjustments. How to deal with them?
57:32 - How do different category forecasts for different terms impact the accuracy?
59:00 - Final word

The abstract: Forecast value added is a phrase now very much part of the organisational understanding needed to improve forecasting practice and to select between alternative forecasting methods. One of its more important applications is to understand the improved accuracy achieved by the common practice in demand planning of adjusting a statistical forecasting method based on information gathered through the sales and operations planning process. Various past studies have analysed the results of this adjustment process. This presentation considers a range of data sources to provide insight into the circumstance where gains have been achieved. We identify the key questions facing any organisation where FVA of expert judgmental adjustment is part of the process. But be warned, the conclusions will not be unequivocal; FVA is a complex area and there remains a lot to be learnt and much to be done if organisations are going to develop effective demand planning processes.

Robert Fildes is the Director of Centre for Marketing Analytics and Forecasting, Lancaster University Management School

Mike Gilliland is the Product Marketing Manager for SAS Forecasting software: https://blogs.sas.com/content/author/mikegilliland/