Friday 12 February 2021, 2:00pm to 3:00pm
Online SeminarCompanies have to produce forecasts for hundreds of up to several thousand products to support their operations. As different functions in an organization plan on different horizons and aggregation levels of the market, from individual products to complete markets, they invariably need different forecasts to support their activities. Traditionally, these forecasts are produced independently, considering each item separately from the rest, without capturing cross-effects between products or sharing information between functions effectively. This can lead to multiple different outlooks for the future, misaligned decision making, and eventually either increased costs or lost opportunities. At the crux of this forecasting challenge is the notion of coherence, where forecasts made at the disaggregated level, for example, for individual stock keeping units, must agree with the forecasts at brand, market, or even more aggregate levels. Although this is intuitively clear, both modelling challenges and organizational frictions can make achieving this difficult. In this talk, we will explore how hierarchical forecasting can help organisations produce coherent forecasts, providing a common view of the future from the disaggregate to the aggregate levels in an organization. Building on this, we will look at how innovations in hierarchical forecasting can help us not only achieve better forecast accuracy, but more efficiently use the available information in an organization, and eventually overcome organizational silos by relying on analytics. We will finish the talk with a practical roadmap to incorporating hierarchical forecasts in organisations, and an outlook of the future.
Management Science, Lancaster University
Nikolaos Kourentzes is a professor at Skövde University in Sweden, and a CMAF veteran.