Case Study about Managing Functional Biases in Organizational Forecasts: Consensus Forecasting in Supply Chain Planning
Abstract: To date, little research has been done on managing the organizational and political dimensions of generating and improving forecasts in corporate settings. We examine the implementation of a supply chain planning process at a consumer electronics company, concentrating on the forecasting approach around which the process revolves. Our analysis focuses on the forecasting process and how it mediates and accommodates the functional biases that can impair the forecast accuracy. We categorize the sources of functional bias into intentional, driven by misalignment of incentives and the disposition of power within the organization, and unintentional, resulting from informational and procedural blind spots.
Introduction: Over the past five years, demand/supply planning processes for planning horizons in the intermediate range have been receiving increasing attention, especially as the information technology originally intended to facilitate this planning has achieved limited success. Cross functional coordination among groups such as sales, operations, and finance is needed to ensure the effectiveness of some of these planning processes and the forecasting that supports it. Such processes have been referred to in the managerial literature as sales and operations planning processes. Forecasts within this multi-functional setting that characterizes many organizations cannot be operationalized or analyzed in an organizational and political vacuum.
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