What about business downturns? Part 2

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By Larry Lapide ·

June 29, 2020

This Insights column is the second of a two-part series. It deals with lessons learned from selling and surviving in an organization living through the realities of a “bad news” annual budget—and its corresponding forecasts and plans. It is a slight revision of my column, “My year as a corporate Cassandra” (SCMR, May/June 2015). Such as in the first column in the series, the ideas are largely the same, yet are relevant for today’s managers because the world is experiencing a drastic economic downturn caused by the COVID-19 pandemic and its ensuing mitigation efforts.


Cassandra suffered from a special curse: She was the Greek prophetess that few believed—sometimes to their detriment. The same can be true for demand forecasters and the sales and operations planning (S&OP) team when it is planning for, or living through, a downturn in business that no one else sees coming or believes is possible. As the steadfast harbingers of bad news, their mettle will be tested as pressures are brought to change their forecasts. In order to survive, it’s important for them to remember that they are indeed partners in setting—and helping a company meet—its corporate financial objectives.*

The brunt of these pressures largely falls upon the demand forecasting organization because demand forecasts drive supply plans. When, like Cassandra, one forecasts a significant downward change in business, few will believe it, sales and marketing personnel will deny it could happen, finance will panic about operating margins and executives will have doubts. I know this because I experienced a tough year during my five-year tenure managing the forecasting organization for the field service division of a Fortune 500 computer manufacturer. While assuming the role of corporate Cassandra was stressful, it was actually both my best and worst year in forecasting because it was an important professional developmental year.

This column gives an account of a period that began with the preliminary revenue forecast for the following year’s budgeting process. I use it to discuss lessons learned should forecasters and their S&OP partners experience a similar year that often involves surviving an awkward, unsettling and politicized environment.

By Larry Lapide ·

June 29, 2020

This Insights column is the second of a two-part series. It deals with lessons learned from selling and surviving in an organization living through the realities of a “bad news” annual budget—and its corresponding forecasts and plans. It is a slight revision of my column, “My year as a corporate Cassandra” (SCMR, May/June 2015). Such as in the first column in the series, the ideas are largely the same, yet are relevant for today’s managers because the world is experiencing a drastic economic downturn caused by the COVID-19 pandemic and its ensuing mitigation efforts.


Cassandra suffered from a special curse: She was the Greek prophetess that few believed—sometimes to their detriment. The same can be true for demand forecasters and the sales and operations planning (S&OP) team when it is planning for, or living through, a downturn in business that no one else sees coming or believes is possible. As the steadfast harbingers of bad news, their mettle will be tested as pressures are brought to change their forecasts. In order to survive, it’s important for them to remember that they are indeed partners in setting—and helping a company meet—its corporate financial objectives.*

The brunt of these pressures largely falls upon the demand forecasting organization because demand forecasts drive supply plans. When, like Cassandra, one forecasts a significant downward change in business, few will believe it, sales and marketing personnel will deny it could happen, finance will panic about operating margins and executives will have doubts. I know this because I experienced a tough year during my five-year tenure managing the forecasting organization for the field service division of a Fortune 500 computer manufacturer. While assuming the role of corporate Cassandra was stressful, it was actually both my best and worst year in forecasting because it was an important professional developmental year.

This column gives an account of a period that began with the preliminary revenue forecast for the following year’s budgeting process. I use it to discuss lessons learned should forecasters and their S&OP partners experience a similar year that often involves surviving an awkward, unsettling and politicized environment.

 



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Article Topics

COVID-19 &middot

Finance &middot

InSights &middot
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2020-06-29 13:12:00

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