S&OP Series (2/3): How Consensus Turns Accuracy Into Margin: Issue 03

Welcome back!

In our last edition, we explored the first two phases of the S&OP cycle: Assortment and Baseline Forecasting.

Quick recap: We covered how to launch products with just enough inventory – and sunset them without having unnecessary stock after discontinuation.

Then we cleaned up the forecast with outlier removal and AutoETS. The result? A baseline forecast accurate enough to cut safety stock and unlock cash, without risking stock outs.

Today, we continue the cycle with the next step: Adjustments and Consensus.

Because even the best baseline forecast won’t survive first contact with Sales and Marketing.

What happens after the baseline?

You’ve got your clean forecast. Outliers handled. Method selected. Error minimized.

But then Sales runs a retail promo. Marketing launches a last-minute campaign. Or someone in ops learns that Costco just increased their PO quantity.

These don’t fit into any historical pattern. But they matter.

That’s where adjustments come in.

Adjustments: the human override

Everyone contributes:

• Sales wants to increase forecast for their Q3 deals

• Marketing expects a boost from new creative

• BizOps thinks one SKU will underperform due to a new competitor

Each of these inputs adds signal – but also noise.

Let’s visualize it:

This is what happens when every team adds their overrides without restraint: overshoot.

You’re staring at an overforecast.

And it happens all the time - because teams optimize locally:

• Sales wants to never stock out

• Marketing wants to always be ready

• Ops wants to hedge against lead time risk

But these decisions need central consensus.

Consensus: where judgment meets discipline

Enter the S&OP Owner, often called Planning Lead, Head of Ops, or COO.

Their job:

• Review adjustments

• Accept what’s justified

• Reject what’s not

• Align all teams on one final number

This is the consensus forecast. The one number that drives supply.

Let’s see what that looks like when the Planning team pushes back:

Now we’ve rejected some of the more aggressive overrides.

Here’s the result:

Forecast accuracy improves. MAE drops. The baseline was good. But this is better.

Better Forecasts, Better Margins

Let’s run the math again for the example above:

• Unit difference to actuals: 287 → 76

• MAE: 92 → 51

That’s a 44.5% improvement in forecast accuracy – nearly cutting your error in half.

And that kind of improvement matters: It translates directly into working capital savings and more recovered revenue due to less stockouts.

Remember the $675K in freed-up cash we saw last week?

This is how you get there: with a clean baseline, structured adjustments, and one aligned number driving supply.

By aligning all teams to one forecast, we unlock hundreds of thousands of dollars — simply by doing one thing: Getting to one number.

That’s where the consensus step delivers its value. It turns a clean baseline and structured adjustments into one actionable number and translates improved forecast accuracy into real margin.

What we learned today

• Adjustments bring critical business context to the forecast – but must be managed

• Unchecked overrides create inflated forecasts and inventory bloat

• The consensus phase filters noise and forces alignment

• Better alignment → lower MAE → more cash unlocked

In the next volume, we’ll cover Supply Review, where forecasts meet operational reality and close the cycle with Executive Review to measure performance.

Because even with consensus, things go sideways: shipments get delayed, promotions overperform, or demand collapses. The question then becomes: how do you respond and learn?

See you next time.

Leon