PURPOSE

PROCESS

increasing choice

ADAPTATION

How do we structure the business to compete most effectively?

Creating Options	

ADAPTATION

Freedom of action Alternative scenarios of the future
environment Broad brush estimates	

NAVIGATION

How do we deploy our resources to best effect?

Optimal Decision Making	

NAVIGATION

Choice of response limited
maximally profitable estimate of what will happen (based on current assumptions) Detailed enough (with ranges)	

RESPONSE

How do we service demand efficiently?

Implementation		
RESPONSE

Highly constrained Prediction of what will happen
Detailed forecasts	

Strategic Planning

increasing predictability

Business
Forecasting

Operational Forecasting

Forecasting is about decision making, because…

…you first need to work out where you are heading (FORECAST)….

..and then what you have to do differently to get back on track (TARGET)

QUARTER

..while it is necessary to have a plan….

QUARTER

Proj Inc Stmt

©Satori Partners Ltd

…the world often turns out different to
the way you expected so….

Key concepts

A profit target is what we would like to happen
which we achieve by producing
A forecast - what we think will happen
based on:
A set of plans: what we intend to do,
which we change to achieve our target

Specification for a forecast
T = timely
A = actionable
•	respecting all
capacities & contraints
R = reliable
A = aligned
•	for max profit
C = cost effective

TARAC	CARAT

TIMELY

TARAC - CARAT

…in good time to take action

ACTIONABLE

…good forecasts have information about things we can change and constraints & capacities we must respect

Impact of activities

business as usual

RELIABLE

…unbiased (+ errors = - errors )..

..with an acceptable (known) level
of variation…

•	MAX PROFIT
•	RISK

positive errors

negative errors

forecast

ALIGNED	…pointing in the same

not

direction…

COST EFFECTIVE

…right first time - no rework or waste