As an emerging role within the field of supply chain management, forecast analysis is being recognized for its power to positively impact a company’s productivity and profitability. (For those who aren’t sure, the supply chain is the reason we get to eat tropical fruit from Costa Rica, and wear boots made in Milan. Or if we’re going to be real here, Guangzhou.) The role requires you to predict how much product a company will need, several months to a year in advance. Put simply, the forecast analyst is the one that makes sure there are plenty of iPads for Christmas, and not too many skull-shaped candies left over after Halloween.
Professor Diane Bischak, associate professor of operations management at the Haskayne School of Business (University of Calgary), describes forecast analysis as “the basis of all supply chain planning.”
“Accurate forecasting of future customer product demand helps manufacturers keep production and inventory costs down,” she writes in an email. “Without [it], companies may produce too many units of one product at a given time and will then have to hold them in inventory. They may also not produce enough of a different product, missing out on sales opportunities.”
As the vice president of supply chain at Loblaw, Chris Lucky manages orders for grocery, general merchandise, apparel, health, and beauty products—that’s no trifling amount of stock. And if he doesn’t get it right, he says, the consequences are serious. “Studies have shown that chronic out-of-stocks lead to permanent loss of loyal customers,” he says. “It’s my job to continuously ensure we have a steady flow of the right product to our store, at the right time.”
Aaron Krause, supply chain manager for Lowe’s Canada, relies heavily on the predictions of his forecast analyst so he can co-ordinate his team. “(For example,) the distribution centre needs to know in advance what kind of product is coming through so they can be prepared to receive it,” he says. It’s no use ordering stock if he has nowhere to put it.
Divining the future like this is something of a dark art and there are several techniques to aid in a forecaster’s corporate clairvoyance. Krause says past sales results are always helpful, but nothing beats good ol’ fashioned detective work, as what sells in one store doesn’t always fare well in another. And, as always, the almighty seasons rule.
So you’ve predicted the Stanley Cup winner five years running and you always buy exactly enough peanut butter to last until next paycheque; Forecast analysis sounds like your kind of role. The skills you’ll need are covered by many of the supply chain management courses offered across Canada (like Bischak’s), but if you’re halfway through an unrelated degree, never fear. Both Aaron Krause and Chris Lucky say there are many skills transferrable to the field, and they should know: Krause has an engineering degree and Lucky is an accredited accountant.
Lucky says perks of the job are getting it right and seeing the customer satisfaction that comes with that. The downside, he says, “is at times, the only gratitude is that you get to do it all over again.” But all our experts agree that the field is an exciting one with excellent prospects.
“Smart companies are realizing the importance of demand forecasting and management in holding down costs and enhancing revenues in a supply chain,” says Bischak. “If you know these methods and techniques, you would be an excellent resource for these companies to improve their profitability.”