SKU Level Forecasting Or Aggregate Planning

Talk to any supply planner, they will say they need a forecast at the SKU level; the more detail the better. Mark Chockalingam of DemandPlanning.Net discusses the case for S&OP.

“So the demand planner is on the defensive, he needs to forecast at the most granular level to satisfy the demands of the supply chain”, Chockalingam says.

“Create and deliver a demand forecast at the SKU/location and sometimes at the SKU/customer/location level. But the more detail you get, the more noisy the data gets and it becomes impossible to create good statistical models at that level.”

Chockalingam thinks it is important to have a software package that allows you to get the forecast at that level. However, analyzing, reviewing and consensing at that level has its perils. Living too much at the detail level will definitely trap you from getting to the important challenges of the business and resolve true exceptions.

“Looking at aggregate numbers for review and consensus among stakeholders leads to the Sales and Operations Planning process. Truly balancing Supply and demand at the aggregate level will result in driving the stakeholders to understand the true business problems.”

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