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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.
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Managing functional biases in organizational forecasts: a case study of consensus forecasting in supply chain planning
2008, Harvard Business School
in English
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Managing functional biases in organizational forecasts: a case study of consensus forecasting in supply chain planning
2007, Harvard Business School
in English
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Managing functional biases in organizational forecasts: a case study of consensus forecasting in supply chain planning
2006, Division of Research, Harvard Business School
in English
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Edition Notes
"Draft: October 10, 2006"--Added t.p.
Includes bibliographical references.
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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 forecasting approach around which the process revolves. Our analysis focuses on the forecasting process and how it mediates and accommodates the functional biases that can impair the forecast accuracy. We categorize the sources of functional bias into intentional, driven by misalignment of incentives and the disposition of power within the organization, and unintentional, resulting from informational and procedural blind spots. We show that the forecasting process, together with the supporting mechanisms of information exchange and elicitation of assumptions, is capable of managing the potential political conflict and the informational and procedural shortcomings. We also show that the creation of an independent group responsible for managing the forecasting process, an approach that we distinguish from generating forecasts directly, can stabilize the political dimension sufficiently to enable process improvement to be steered. Finally, we find that while a coordination system-the relevant processes, roles and responsibilities, and structure-can be designed to address existing individual and functional biases in the organization, the new coordination system will in turn generate new individual and functional biases. The introduced framework of functional biases (whether those biases are intentional or not), the analysis of the political dimension of the forecasting process, and the idea of a coordination system are new constructs to better understand the interface between operations management and other functions.
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