Exploring the Forecasting Process in a Fast Moving Consumer Goods Company

Jesus Canduela¹, Robert Raeside¹, Ignazio Cabras^2
(1. Employment Research Institute, Edinburgh Napier University, Edinburgh EH14 1DJ, UK);
2. Newcastle Business School, Northumbria University, Newcastle-upon-Tyne NE1 8ST, UK)

Abstract: The aim of this paper is to explore the forecasting function in a FMCG company, in order to understand actors’ functions and behaviour within the system and the impact of these on forecasting performances. The study intends to expand knowledge related to forecasting performances in complex situations and to address the “theory-practice gap”. The authors develop their study by using the case study of a major UK brewery, by analyzing the company’s documents and by conducting a participatory exploration within the company. Ten key personnel were approached and interviewed with in-depth semi-structured interviews, while four pivotal managers took part in unstructured interviews. Results provide empirical insights about how the forecasting function is perceived in terms of usefulness, the process and also with regard to the environmental elements that may have an impact on its performance. Findings suggest that changes in the marketplace for FMCG companies, and the ever-increasing negotiating power of large customers in particular, have shaped their forecasting strategy. Recommendations are made for FMCG companies to focus less on forecasting at SKU or product levels and to develop more reactive systems, more responsive to customer demand but with reduced focus on building up high stock levels.

Key words: fast moving consumer goods; forecasting process; interaction among departments; brewery industry

JEL codes: L1, L2, L6