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Social Forecasting for New Products

S&OP demand forecasting for new products is particularly difficult for retailers such as Tchibo. Loyal to their slogan “Every Week a New World” Tchibo introduces new products every week, as a permanent addition to their standard offer – in more than 2500 branches across Europe. The challenge for Tchibo is to create S&OP demand forecasts every week for products that have no data or statistics that can be resorted to. Surveys and mystery shopping are too expensive in this case. Therefore Tchibo decided to introduce Social Forecasting. Social Forecasting is a new Enterprise 2.0 approach. Traditional Enterprise 2.0 approaches, like wikis or blogs, tend to create huge amounts of comments. Social Forecasting uses the knowledge of employees and converts it into a single (or more) number, e.g. Sales forecasts in $. Based on this, the management is able to make accurate decision. Tchibo was able to lower their costs significantly by using social forecasting while maintaining high prediction accuracy. The annual savings were ranging in millions. Other successful examples of large German companies can be found here
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