On Monday, February 23, a series of optional full-day pre-conference workshops will be given by leading forecasting experts on a variety of topics. These workshops will allow for more in-depth discussion on key forecasting topics including:

 Basics of Time Series Forecasting
 Change Management: Key to Effective S&OP Implementation
 Understanding Customer Lifetime Value: Conceptual Overview and Implementation in Excel
 Developing Accurate Demand Plans in an Economic Downturn

FULL DAY WORKSHOPS

Basics of Time Series Forecasting
This workshop provides an overview of time series forecasting, including a review of various forecasting models and how they are applied. Past Forecasting Summit attendees have told us that they are often torn when deciding which sessions to attend during the main conference—many don’t want to miss out on the outstanding Forecasting Seminar taught by Len, but also want to take advantage of the other sessions offered concurrently. By choosing to attend the Forecasting Seminar pre-conference workshop, you benefit from covering the majority of the Forecasting Seminar topics (all but Box-Jenkins and Dynamic Regression) prior to the main conference, giving you the freedom to attend other sessions during the main conference.

Len Tashman
Professor Emeritus
University of Vermont (UVM)

Change Management: Key to Effective S&OP Implementation
In many organizations, Sales and Operations Planning (S&OP) is being implemented in an effort to more closely align demand with the supply side of the company. However, even though the case for S&OP implementation is clear, there are often significant roadblocks to effectively transition to these new organizational processes. After nearly 30 years of research into Demand Forecasting, Demand Planning, and S&OP, the Forecasting Research team at the University of Tennessee has developed a roadmap for managing the far-reaching changes that are required to implement S&OP effectively. In this workshop, Dr. Moon will first articulate a vision of World Class S&OP. He will then help each participant, through exercises and break-outs, to formulate a customized roadmap to leverage internal support, overcome resistance, and effectively manage S&OP implementations at their own organizations. Topics will include:

 A Vision of S&OP as Demand/Supply Integration
 The Role of Demand Forecasting in S&OP
 The Demand Review
 The Supply Review
 The S&OP Reconciliation Review
 Executive S&OP
 The Levers of Change – Effective Change Management

Dr. Mark A. Moon
Director, Sales Forecasting Management Forum
University of Tennessee

Understanding Customer Lifetime Value: Conceptual Overview and Implementation in Excel
In recent years, the notion of “customer centricity” has become a critical topic for many organizations. Increasingly, senior management has been asking analysts to obtain valid answers to questions such as: (1) Which individuals are most likely to be active customers in a future period of time? (2) What will the aggregate and disaggregate purchase patterns look like for a group of customers in the future period? (3) What will be the “lifetime value” for individuals within the firm’s customer database (or the corporate database as a whole)? Unfortunately, the traditional set of analytic tools – often centered around regression analysis – is not very well-suited to address these kinds of questions.

Based upon material developed in conjunction with Dr. Bruce Hardie of the London Business School, this workshop aims to bring practitioners fully up to speed on these issues and the use of basic probability modeling methods to address them. In the morning, you will develop an understanding and appreciation of customer lifetime value (CLV) in a standard contractual setting through a case study that identifies the key conceptual issues associated with it. Professor Fader then “drills down” in more detail, showing how to develop a simple probability model that captures the primary behavioral issue (i.e., forecasting customer retention) that underlies these CLV calculations. He implements this model within a familiar spreadsheet environment, using the built-in “Solver” tool in Excel to obtain parameter estimates.

In the afternoon, you will complete the investigation of CLV issues in the contractual setting, then turn your attention to the more common (and more challenging) non-contractual domain. The focus will be on important issues that are unique to this setting, such as: (1) finding ways to characterize and summarize transaction-level data across customers, (2) determining which customers are no longer active (versus those who are merely on a long hiatus between transactions), (3) modeling “spend per transaction” as well as the flow of transactions over time, and (4) calculating CLV and linking it to the well-known RFM rubric (“recency, frequency, monetary value”). Once again, Professor Fader will emphasize the use of spreadsheets in carrying out these analyses.

Overall, this workshop offers the following “takeaways”:

 A careful exploration of the concept of customer lifetime value (CLV) and the many issues associated with its definition, motivation, and applications.
 Demonstration of how to capture and project customer retention using a simple probability model in a spreadsheet environment.
 Illustration of the financial implications of calculating CLV the “right way” (using a proper, well-validated model) instead of relying upon more naïve ad hoc approaches.
 The contrast between the definition and implementation of CLV in a contractual vs. non-contractual setting.
 Thorough coverage of the unique challenges that must be considered when dealing with CLV (and related issues) in the non-contractual setting.

Dr. Peter Fader
Professor of Marketing
The Wharton School, University of Pennsylvania

Developing Accurate Demand Plans in an Economic Downturn
A key component of the Sales and Operations Planning (S&OP) process is planning demand for a company’s products across an extended horizon. This is difficult enough in a stable economic environment, and becomes significantly more challenging when the economy takes a turn for the worse.

How can demand managers develop a demand plan that anticipates the level of decline given changes in the economy? That is the “opportunity” demand managers are facing today. Margins are being squeezed, manufacturing is being tasked with lowering costs and increasing productivity, and all the functions within the business are being asked to run with fewer resources. The ability to produce a viable, measurable demand plan is critical to managing in tough economic times—companies that do this well will be better positioned to take advantage of the upturn when it occurs.

A key component of evaluating multiple demand plan options is the scenario planning process. Communicating these scenarios to senior management is critical to ensure a final plan is agreed upon at the appropriate level in the organization. This session will describe options available to demand managers for developing accurate demand plans during an economic downturn and review scenario planning options within an S&OP process.

Bill Mackie
Managing Principal
Oliver Wight

  Business Forecast Systems in cooperation with the International Institute of Forecasters