Demand planning: it's high time to light up a new lamppost!

Like many of us, I'm a huge fan of Jono Hey's work. Every week, on Sketchplanations.com, Jono publishes a sketch visually explaining some more conceptual ideas or expressions. If you did not subscribe to his weekly newsletter yet, I highly recommend you do, just like more than 20k fans!

Beginning of April, Jono published the below sketch illustrating the metaphor "Looking under the lamppost".

As Jono describes it :

It's an apt metaphor for how, if we're really honest with ourselves, sometimes we find ourselves working, or searching, or staying in the places where we find it easier rather than the places where we know we ought to be.

We're sometimes so used to view things from a certain perspective, that it becomes quite uncomfortable to challenge the status quo.

In demand planning, here is the industry norm:

• Decades of practices have established that a good forecast is accurate and unbiased. They have set the no-error "oracle" forecast as the ultimate goal that should be pursued at all costs.
• Dozens of accuracy metrics have been defined to support this endless quest, even though they most of the time contradict each other.
• Benchmarks have been shared, even though most of us agree they are misleading and can't provide fair comparisons.

Doing so, the industry norm has lighted up its unique lamppost, shedding lights only on accuracy. Even though we all agree that forecasting is not an end but a mean, this unique lamppost forces us to discard its effective contribution to decision-making!

And to be fair, because the norm is THE norm, demand planners have more or less no other choice than to focus on accuracy only.

Existing forecast accuracy metrics deliver great insights to help forecasters improve their practice. But let's say it loud and clear:

Forecast accuracy metrics don't give a single clue on whether or not value is delivered...

It's then time to challenge the status quo and adopt the new generation of "Decision impact" metrics that propose to close the gap between forecasts and business value. Those metrics were recently introduced in this article: "Decision Impact": 10 reasons to implement the new generation of business-oriented metrics.

Implementing them is a necessity for any company. It might be uncomfortable at first as these metrics will for sure highlight added value but will also publicly shed light on areas of underperformance. But that's the first step to take: measure always come before improvement...

So what should we do, as a community of demand planners? Should we widely embrace them as an opportunity to raise our game to a higher level? Or should we stick to good old ways of working... desperately searching value under our unique lamppost?

It's high time to light up a new lamppost!