Original Date: 05/01/2000
Revision Date: 01/18/2007
Best Practice : Rolling Forecast System
In the past, Northrop Grumman Defensive Systems Division’s (DSD’s) method for forecasting acquisitions involved an undocumented, manually-intensive informal process which used a single-user Paradox system. This system was infrequently updated, had limited hard-copy report distribution, was independent of other planning systems, and did not operate in real time. The need to revise this process became more apparent in the early 1990s as Northrop Grumman DSD migrated from a single-product dominated facility to a multi-program plant. As a result, the company developed the Rolling Forecast system which forecasts new business and funding acquisitions for long- and short-range business planning activities. Forecast data is used in planning rates and manpower, and provides critical input into Northrop Grumman DSD’s Sector Long Range Strategic Plan and Annual Operating Plan.
From 1992 to 1994, Northrop Grumman DSD developed, documented, implemented, and tested an initial version of its forecasting system. The need for automation was then recognized. Beginning in 1995, the company developed system and software requirements for its forecasting system, tested commercial-off-the-shelf (COTS) products, and finally decided to develop its own unique software application package. A contract was issued to Metamor Technologies, Ltd. for software development with the support and contribution of Northrop Grumman DSD’s in- house software developers. As a result, all improvements and revisions to the database are now completed on-site by Northrop Grumman DSD. The Rolling Forecast system was launched in December 1996, along with intensive user training.
The Rolling Forecast system tracks activities across all product lines and market segments from initial concept exploration through post-production support. Every forecast entry in the system is assigned a probability of go and a probability of win. Under this methodology, all acquisitions are included in the portfolio at the corresponding weighted value. Features of the Rolling Forecast system include a multi-user Windows-based platform, a standardized view and control of data for all product lines, system security, on-line approval, flexibility, real-time capability, extended search options, and expanded capability to manipulate data within the database. Program Management, Business Management, and Business Development generate the data, and Business Development manages the process.
When a business opportunity is entered into the database, a unique rolling forecast identification number is generated. User access and privileges, as well as code table maintenance, are controlled by Business Development through the system administration functions within the application. Formal system updates are conducted at least two times a year, and updates to the current year are done monthly. Users and management are able to access acquisition data and other relevant information such as customer, contract type, description, key milestones, status, and program phase. The Rolling Forecast system can generate 26 parameterized standard reports in full or factored dollars. Furthermore, information contained within the database can be exported into Microsoft Word, Excel, or Access, and e-mailed as Rich Text Format. A web-based, on-line help system has also been implemented to support the forecasting system.
Northrop Grumman DSD’s Rolling Forecast system provides documented policies and procedures, and a process for continuous improvement. Since implementing this system, the company’s forecast accuracy continues to improve. The mid-year indicated final projection for 1999 was within 1% of the actual year-end number. The key to the Rolling Forecast system is its flexibility within the constantly evolving business environment. The user-friendly database provides real-time data to users and management; standardizes data; and tracks progress of opportunity throughout the entire process.
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