CRITICAL REVIEW OF ARTICLE –

Benchmarking Sales Forecasting Management

Authors: IPMX12 ME Group 4

Amandeep Singh (IPMX12004)
Dilip Balasubramanian (IPMX12014)
Narendra Sheel Maurya (IPMX12024)
Rashmi Rani (IPMX12034)
Srinivas Rao (IPMX12044)

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Introduction
The article “Benchmarking Sales Forecasting Management” is written by John T.
Mentzer, Carol C. Blenstock and Kenneth B. Kahn. In this review we have focussed
on analysing this article from different dimensions as well as focussing on learning
multi-disciplinary application.

Summary
This article touches upon the relatively less focused area of sales forecasting which is
‘How the forecasting function should be managed’. For this purpose, authors studied
the best practices in the field by analysing the selected 20 companies with histories
as leading financial or market share performers. The benchmarking analysis of these
companies led to the conclusion that sales forecasting management can be divided
into four dimensions: Functional Integration, Approach, Systems and Performance.
Within each dimension, four stages of effectiveness were identified. It was found that
using the characteristics of each stage within each dimension, it is possible to derive
guidelines to enable companies to progress toward a higher level of sophistication for
each forecasting dimension.

Forecasting improvement measures for companies

The article suggests that to improve forecasting effectiveness on Functional
integration dimension, companies should recognize forecasting as a separate
functional area. It also encourages common goal setting through communication,
Coordination and Collaboration. Further it recommends rewarding the personnel
involved in forecasting process based on the forecasting efficiency.
Under the Approach dimension, the article suggests that to improve forecasting
effectiveness, companies should obtain top management support for
forecasting/business plan process. It should reconcile top-down and bottom-up
forecasting. The article also recommends to train forecasting personnel in
quantitative analysis/statistics and understanding business environments.
In the System dimension, the article suggests abolishing ‘islands of analysis’ which is
defined by having a number of separate information systems which are not
interconnected and move to a client-server architecture. It also suggests developing
common ownership of databases and information systems.
Under performance measurement dimension, the article stresses to measure
forecast accuracy at all levels relevant to the functional areas using the forecast. It
recognizes MAPE as the most popular measure of accuracy and suggests providing
both mathematical and graphical measure of accuracy.
Relevance across industries and in present time
This article is old, but its findings and improvement suggestions are relevant today as
well. They can be applied to almost all industries as firms all over India and world
across all industries use the forecasting in all aspects of business. Based on the
forecasted data, goals are set for different functions. Inaccurate forecasting results
may affect the business seriously. Though most of the companies focus on the

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techniques used for forecasting to improve the accuracy, it is equally important to look
at the managerial approaches involved in the forecasting process. The
recommendations given in this study to improve the forecasting efficiency under four
dimensions are based on in-depth analysis and are applicable to all industries in any
time period. In the competitive market of today, firms need to be at par with each other
in every aspect from planning to forecasting and from pricing to distribution. Hence
this article becomes more relevant with respect to the accuracy and approach of
forecasting.

LIMITATIONS
The article gives many improvement measures to improve forecasting by analysing
the companies at four stages of process. These suggestions are not backed up by any
data or assurance that these will reflect in a significant improvement in forecasting
efficiency.
Additionally, the article does not discuss the cost implications of the measures
suggested in the study. It insists on considering forecast accuracy must be measured
at all levels relevant to the functional areas using the forecast but does not consider
the economic costs involved therewith.

CONCLUSION
This finding in the article can be applied to any industry which uses forecasting in its
business processes. Based on the forecasted data, goals are set and inaccurate
forecasting results may affect the business seriously. Thought most of the companies
focus on the techniques used for forecasting to improve the accuracy, it is equally
important to look at the managerial approaches involved in the forecasting process.
This article also compares the advantages and disadvantages of using different
forecasting approaches which may help many companies to reflect upon their own
shortcomings in the forecasting approach and follow the right approach.