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Temporal Big Data for Tactical Sales Forecasting in the Tire Industry

Author

Listed:
  • Yves R. Sagaert

    (Department of Industrial Systems Engineering and Product Design, Ghent University, 9000 Gent, Belgium; Solventure NV, 9000 Gent, Belgium)

  • El-Houssaine Aghezzaf

    (Department of Industrial Systems Engineering and Product Design, Ghent University, 9000 Gent, Belgium; Flanders Make, 3920 Lommel, Belgium)

  • Nikolaos Kourentzes

    (Department of Management Science, Lancaster University Management School, Lancaster LA1 4YX, United Kingdom)

  • Bram Desmet

    (Solventure NV, 9000 Gent, Belgium)

Abstract
We propose a forecasting method to improve the accuracy of tactical sales predictions for a major supplier to the tire industry. This level of forecasting, which serves as direct input to the demand-planning process and steers the global supply chain, is typically done up to a year in advance. The product portfolio of the company for which we did our research is sensitive to external events. Univariate statistical methods, which are commonly used in practice, cannot be used to anticipate and forecast changes in the market; and forecasts by human experts are known to be biased and inconsistent. The method we propose allows us to automate the identification of key leading indicators, which drive sales, from a massive set of macroeconomic indicators, across different regions and markets; thus, we can generate accurate forecasts. Our method also allows us to handle the additional complexity that results from short-term and long-term dynamics of product sales and external indicators. For the company we study, accuracy improved by 16.1 percent over its current practice. Furthermore, our method makes the market dynamics transparent to company managers, thus allowing them to better understand the events and economic variables that affect the sales of their products.

Suggested Citation

  • Yves R. Sagaert & El-Houssaine Aghezzaf & Nikolaos Kourentzes & Bram Desmet, 2018. "Temporal Big Data for Tactical Sales Forecasting in the Tire Industry," Interfaces, INFORMS, vol. 48(2), pages 121-129, April.
    • Handle: RePEc:inm:orinte:v:48:y:2018:i:2:p:121-129
    DOI: 10.1287/inte.2017.0901
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    References listed on IDEAS

    as
    1. Trapero, Juan R. & Pedregal, Diego J. & Fildes, R. & Kourentzes, N., 2013. "Analysis of judgmental adjustments in the presence of promotions," International Journal of Forecasting, Elsevier, vol. 29(2), pages 234-243.
    2. Trapero, Juan R. & Kourentzes, N. & Fildes, R., 2012. "Impact of information exchange on supplier forecasting performance," Omega, Elsevier, vol. 40(6), pages 738-747.
    3. Robert Fildes & Paul Goodwin, 2007. "Against Your Better Judgment? How Organizations Can Improve Their Use of Management Judgment in Forecasting," Interfaces, INFORMS, vol. 37(6), pages 570-576, December.
    4. R Fildes & K Nikolopoulos & S F Crone & A A Syntetos, 2008. "Forecasting and operational research: a review," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 59(9), pages 1150-1172, September.
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    Cited by:

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    4. Xu, Jinou & Pero, Margherita & Fabbri, Margherita, 2023. "Unfolding the link between big data analytics and supply chain planning," Technological Forecasting and Social Change, Elsevier, vol. 196(C).

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