Forecast and Plan Demand with Excel Spreadsheets and Gut Instinct?

DOW up, DOW down; oil prices spike, oil prices spiral down; jobless claims up, jobless claims steady!! The news is full of contradictions. Is it the start of recovery after what was termed the greatest economic crisis since the Great Depression or are we still in the midst of a perfect storm?

What we know for sure is that this is a different world – past trends are no longer indicative of future. Still, it is surprising to see how many companies continue to adhere to demand planning practices of past. In a recent survey on current state of demand forecasting practices, conducted by SAS and Purdue University, it was found that Excel Spreadsheets are still the most frequently used demand management tool with about 85% of respondents reporting use of the same for demand forecasting and planning. Interestingly, in the same survey, about 54% of respondents reported using jury of executive opinion as a frequently or occasionally used technique in demand forecasting process.

No wonder in past two years, we saw a large number of companies, across multiple disciplines, write off huge inventories, run continuous promotions at rock-bottom prices, and in general do anything to survive. But that is not the complete picture! We also saw a handful of companies that stood firm in face of market volatility and even emerged stronger. What is it that made these companies deal with market pressures better? How were their demand forecasting and planning practices different from others to make them more resilient?