Q&A: Good forecasters "have an appreciation for the sensitivity of the market"
Bob Draper, head of global forecasting at Eli Lilly, on best practice in forecasting
By on Sep 27, 2010Bob Draper, head of global forecasting at Eli Lilly, on best practice in forecasting
eyeforpharma: Should demand plans be built around a single number?
Bob Draper: I dont think many companies have one view of demand, let alone have it synchronized. This is very difficult to achieve in a large organization.
How do you establish a good forecasting culture?
Forecasting problems are so fluid that experience and on the job training are the most critical elements. [Forecasters] need to consider that events may have a larger impact than ever before. They may impact quicker than ever before. A good forecaster will have an appreciation for the sensitivity of the market to certain factors and be able to sense when to modify models and techniques if they become ineffective. Forecasters can become over-reliant on models rather than focusing on their key deliverable, which is information to drive better decision-making.
What is the ideal forecast horizon?
I am a big proponent of forecasting for as long a time horizon as possible, the main reason being that the forecast can be wrong but, if it is specific, it is easier to say why the forecast is wrong and make corrections and then learn from those corrections. [The issue of benchmarks] is difficult, as there are few quantitative benchmarks for pharma forecasting that make sense. Pipeline forecasts are very difficult to measure accurately, as profile changesindependent of forecastdrive the most changes. I think probably the biggest measure is whether or not the organization bases decisions on forecasting data. (For more on pipeline forecasts, see Forecasting for pipeline products.)
What are the biggest wins forecasters can achieve?
I dont see production efficiencies and minimizing inventory-carrying costs as the biggest wins for forecasting in the pharma industry. With inventory costs relatively low, and products typically having long shelf lives, there is relatively little to be saved. However, short-term accuracy is critical to driving the credibility needed to enable forecasters to influence decisions, particularly tactical resourcing decisions.
How do you judge forecasting success?
Quality is always better than quantity. It is imperative to have specialist forecasters with lots of experience in their roles, with access to data and the IT support to leverage the best technologies. The forecasting leader needs to report as high as possible to remove potential for bias. If a forecasting group has a seat at the table for big decisions, then it has proved its mettle.
For more insights from Bob Draper, see How to increase forecasting effectiveness.
Learn more at the Pharma Forecasting Excellence Summit in Boston from October 5-6, 2010.