Supply Chain Collaboration is a process by which you can combine inputs of various parties involved in the demand creation or evaluation process to improve overall demand planning and increased forecast accuracy.

Types of Supply Chain Collaboration & Collaborative Forecasting

We consider there to be two types of collaborative forecasting – external and internal.

External Collaborative Forecasting

An example of external collaborative forecasting would be vendor managed inventory. With vendor managed inventory, you take on the responsibility to manage the collaborative planning forecasting and replenishment process for key customers. Another example is supplier collaboration, where you share your own forecasted needs for some time into the future with key suppliers in order for them to better serve you. In good collaborative forecasting, sharing of information with trusted partnering approach, the companies each benefit from the sharing up or down of relevant demand and supply data.

Internal Collaborative Forecasting

The best example of internal collaborative forecasting is the sales and operations planning process (S&OP). By getting inputs from the sales (and possibly the marketing team), operations management can make any necessary adjustments to the base statistical forecast to improve the accuracy of the demand plan.

Salespeople have knowledge of new accounts, an existing account about to buy a new product line – activities which are not represented in the demand history by the forecasting system. Thus this knowledge is crucial to factor into the demand plan to maintain desired service levels to your important customers.

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