Author Abstract
To date, little research has been done on managing the organizational and political dimensions of generating and improving forecasts in corporate settings. We examine the implementation of a supply chain planning process at a consumer electronics company, concentrating on the consensus forecasting approach around which the process revolves. Our analysis reveals how the implemented forecasting process manages the political conflict and individual and group biases occasioned by organizational differentiation. We categorize the sources of functional bias into intentional, driven by misalignment of incentives, and unintentional resulting from informational and procedural blindspots. We find consensus forecasting, despite a number of characteristics of that make it a challenge to fit to a dynamic supply chain environment, to be effective in that context. We further show that the forecasting process, together with the supporting mechanisms of information exchange and elicitation of assumptions, is capable of managing the political conflict and the informational and procedural shortcomings that accrue to organizational differentiation. Finally, we show that the creation of an independent group responsible for managing not forecasts directly, but rather the forecasting process, can stabilize the political dimension sufficiently to enable process improvement to be steered. We argue that these insights are generalizable and can be fruitfully extended to other settings that require such cross-functional coordination.
Paper Information
- Full Working Paper Text
- Working Paper Publication Date: October 2006
- HBS Working Paper Number: 07-024
- Faculty Unit(s): Technology and Operations Management