Managing Functional Biases in Organizational Forecasts: A Case Study of Consensus Forecasting in Supply Chain Planning
By Rogelio Oliva, N. Watson. Production and operations management, 2009
112 citations recorded by the source corpus.
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.
Subfields: Management Information Systems, Management Science and Operations Research, Strategy and Management
View Paper: https://www.semanticscholar.org/paper/05ade863149163bbfe37444a592e82af7e04fd38
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In Management Information Systems
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- Birendra K. Mishra
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In Management Science and Operations Research
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In Strategy and Management
- David F. Hendry
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- Paul Goodwin
- Birendra K. Mishra
- Nikolaos Kourentzes
- Massimo Guidolin
- Konstantinos Nikolopoulos
Citations in the corpus
- Demand Forecast Sharing in Supply Chains (2009, background): “Recently, Oliva and Watson (2008) studied the forecasting approach in the implementation of a supply chain planning process at a consumer electronics company.”
- Forecasting: theory and practice (2020, background): “Damaging interventions are also probable when they result from political interference (Oliva and Watson, 2009) or optimism bias (Fildes et al., 2009), or when they reflect information already factored into the computer’s forecast, leading to double counting (Van den Broeke et al., 2019).”