Investigating Demand Forecasting Strategy and Information Exchange : A case study at a Swedish wholesaler

Abstract: Purpose – Forecasting is a firm's ability to anticipate or predict the future demand givenon a set of assumptions. For a company to implement an appropriate forecast model whichcan make accurate assumptions, the model needs to be aligned with the company's businesssituation and enhanced through supply chain relationships. Therefore, the purpose of thisstudy is: Investigate how small sized wholesalers benefit from demand forecasting. The purpose is divided into two research questions RQ1: How can a company influenced by a seasonal demand select an appropriateforecast model according to its business environment? RQ2: Why do information sharing issues between supply chain partners occur and howcan wholesalers overcome this resistance? Method – The researchers executed a singular case study at one of the local small-sizedfurniture wholesalers in Sweden. The data collection methods implemented in this studyare interviews, document analysis and a survey addressed towards downstream membersof the wholesalers’ chain, retailers (five participants). The combination of both qualitativeas well as quantitative methods was based on a triangulation principle which helped theresearchers provide a comprehensive understanding of the problem as well as increasevalidity and credibility of the study. Findings – The result of the study raises the importance of selecting a forecast model inaccordance with the company's business situation. Furthermore, by the help of a selfdesigned four-step forecast process the company could identify its influencing factors(seasonality, lead-times, lack of information sharing, etc.), available data, and finally selectthe appropriate model corresponding with the business situation. In this study the Holt-Winters model was selected due to the promotion of simplicity considering the casecompany. Also, the issue regarding information sharing among supply chain partners wasidentified where retailers promotes the performance of the whole supply chain anddemands a partnership as a requirement for sharing information. Implications – As every firm is unique and different in its nature it therefore requires itsown specific forecast process in which can select the appropriate model. However, thestudy revealed how selecting the appropriate forecast model can enhance the businessmeeting their seasonal demand. Additionally, the fact that small-sized companies need toestablish a partnership to receive demand information from their retailers. Based on theresult, the study reveals how companies can enhance their situation through demandforecasting. Limitations - As each model is based on each specific company the results regarding theselected forecast model can be questioned. Furthermore, due to the limited time-period ofthe research a specific forecast process had to be constructed which could only cover thescope of the research and not how the forecast model performed over time. Therefore, alonger time-period of the research could have included extra activities in the forecastprocess which would have validated the model.