When there are multiple entities in the supply chain, forecasting becomes a complex proposition. With collaborative forecasting, demand processes are made compatible among multiple companies in a fully linked supply chain. Risk and variable demand information are shared, with all the companies taking cues from the same demand plan. Changes in demand ripple quickly and easily throughout the supply chain. Supply chain members become partners, aware of the mutual benefits of contributing improvements, rather than competitors attempting to shift cost and risks to the other companies in the chain.
Collaborative forecasting enables business to achieve a variety of benefits.
When collaborative forecasting is successfully implemented, the partners in an e-Business supply chain see reduced cycle times, reduced inventory, improved delivery performance, improved profitability, and reduced overhead costs. When the basics are lacking, they must be addressed before collaborative forecasting can be fully implemented. Collaborative forecasting is not a solution for every company. For some, confidentiality of information and competitive relationships may be a barrier to sharing information. There are three key steps in implementing collaborative forecasting.