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Re-positioning forecasting value

First published in Call Centre Helper February 2016

Simon Butler shares his experience of getting the most from your forecasting capabilities.

You may be thinking there isn’t much opportunity left for transformational development in forecasting to move to the next level? I would agree within the context of forecasting call volumes alone, the gains may well feel marginal.

However, our benchmark research from Standards audit shows, that whilst best practice functions already forecast for AHT and Shrinkages in addition to Demand forecasting, our 2015 Challenge has shown that many are still not yet forecasting for Shrinkage, which accounts for around 50% of our people’s time and a similarly large part of our operational expense.

Where I think there is additional opportunity for breakthrough improvement, is to consider how your forecasting tools, techniques and methods, can be applied to other keys aspects of your organisation – so, moving to the next level can be achieved by discovering new ways of applying your forecasting capability to add value.

Those who are pioneering in this space are starting to use the tools and techniques of forecasting to amplify their decision making capability by applying them to other areas of the business.

Think differently
“If we always do what we always did, we’ll always get what we always got”

So is measuring forecast accuracy and reporting on it that important?

Our contact centre planning processes tend to start with the building of staffing plans based on forecasting demand and effort using things like time series and regression models to determine workload. By predicting productivity and by developing assumptions about availability and transaction effort, we are enabled to forecast the best balance of supply and demand efficiently.

Therefore, knowing about forecasting models, how they work, and the measurement of them would seem like good things, and they are, but it’s crucial that our focus on these doesn’t prevent us from keeping in mind the real bigger picture business issues.

It can be easy to get sucked into perceiving our contribution and impact only through the lens of how these metrics are performing, as opposed to the impact we are having on our real business issues.

The goal of support functions is to make better decisions and those decisions in turn need to be aligned to real issues or objectives. I suspect that none of you work in organisations who’s organisational strategy is to have low forecast error?

It is much more likely your “real” organisational goals will be something like sustainable profitability, delivering excellent customer service, driving growth and achieving the right return on investment. As such we need to recognise the role of forecasting in supporting those real goals, as opposed to only being concerned with accuracy for accuracy’s sake, a forecast’s accuracy is only important when you can articulate how that accuracy impacts the real goals. How far you strive to deliver accuracy should therefore be determined by the needs of the organisational strategy – ask yourself is the juice worth the squeeze when setting accuracy targets. Don’t become afflicted by analysis paralysis, only taking action to improve accuracy for accuracies sake. Stop earlier, at a lower accuracy level, if it is enough to meet the business goals.

Re-invest the time, that you may have spent pushing these metrics unnecessarily, to find out more about the root causes of demand and the drivers of productivity.

My challenge to you would be to consider how you can change your metrics to reflect the real business impact of your forecasting, how can you re-position forecast accuracy to articulate risk and impact on the likes of cost, revenue, service and people, so that you are measured not on the likes of Root Mean Squared, but on how you enable better strategic decision making.

Interface between Forecasting & Insight
As part of moving to the next level another way in which we can think differently is by re-considering the role of forecasting in the Planning team and how it change by aligning it with emerging Insight functions, which are rapidly exploiting the increased amount of readily accessible data in the organisation.

Through our involvement with organisations, we often see these teams working in isolation of each other, which I believe is a missed opportunity.

The Insight team will normally be able to tell you why volumes was what it was and what caused it. By using that Insight in the business forecasting you can increase the value, or perceived quality of the forecasts. We have often seen unfocussed Insight functions adopting a scatter gun approach, producing great analysis, that doesn’t make a difference, as they are not engaged with supporting a specific business purpose and so carry little influence. Aligning their activity to the planning functions goals, can generate outcomes greater than the sum of their individual parts.

I would encourage you to reflect on the stated purpose of each of your Insight team and Forecasting team. Is it to unearth new and interesting information and create accurate forecasts – not unhelpful in themselves, or is it to use new and insightful information to shape your business plans – which may offer an altogether more important offering to the organisation?

By re-positioning forecasting and forecast accuracy in this way we can start to massively influence our organisations, something which is even more the case when we consider how we can use forecasting techniques to plan for the wider aspects of our business than simple call or demand volumes. Consider the likes of Claims inflation, mapping engineers to customer availability, the impact of econometrics on key aspect of the business, mapping potential attrition types and locations and if you can make a difference to the business in these and others areas.

Simon Butler
Head of Engagement and Best Practice
The Forum



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