Account-Based Forecasting or ABF is a key building block in establishing a collaborative demand planning process with your key customers. Also called as Customer Specific forecasting or just Account and National Forecasting, the essence of the process is to break down the demand streams into key customer demand and an all other Demand Group that lumps a number of smaller customers into one statistical series.
The idea behind this methodology is the fact that focused selling and promotions are designed around major customers. As the popular cliché on forecasting goes, such selling activity aggravates the demand volatility. Once these major customers and their volatility-enhancing events are identified and isolated, the remaining All Other Demand streams should be fairly predictable.
Account-Based Forecasting is :
Using this integrated approach, the output is a Bottom-up National forecast for each SKU. The National Forecast can be planned as two demand clusters:
All Other Demand (Modelled statistically)
The ABF collaboration Model leverages consumption and inventory data from the customer and uses a statistical engine to come up with the customer level demand forecasts. The major advantage the ABF process is it enables flexible supply chain planning because of the visibility of customer-level demand.
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