Account Based Forecasting or ABF is a key building block in establishing a collaborative demand planning process with your key customers. Variously called as Customer Specific forecasting or just Account and National Forecasting, the essence of the process is to break down the demand streams into key customer demand and an all other Demand Group that lumps a number of smaller customers into one statistical series.
The idea behind this methodology is the fact that focused selling and promotions are designed around the major customers. As the popular cliché on forecasting goes, such selling activity aggravates the demand volatility. Once these major customers and their volatility-enhancing events are identified and isolated, the remaining All Other Demand streams should be fairly predictable.
Account Based Forecasting is
- an integrated approach
- to leverage customer intelligence (both inventory and retail activity)
- to model promotional activity into both Sales and shipment forecasts
- to build a deployable DC level Plan.
Using this integrated approach, the output is a Bottom-up National forecast for each SKU. The National Forecast can be planned as two demand clusters: Key Customer Demand and Other Demand.
Sum of Key Customers Collaborated Forecasts ( through the C-ABF process)
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The “All Other” demand forecast (statistically modeled)
The ABF collaboration Model leverages consumption and inventory data from the customer and uses a statistical engine to come up with customer-level demand forecasts. The major advantage of the ABF process is it enables flexible supply chain planning because of the visibility of customer-level demand.
If you would like to find out more details on facilitating or developing an account based forecasting process, please contact us.