Beyond Basic Forecasting
Moving Past Basic Forecast Accuracy Improvements
Of all factors that affect business success over the long term, most executives agree that generating forecast accuracy is right at the top of the list. Basic forecasting can have a powerful impact on an organization’s ability to satisfy customers and manage resources cost effectively. A forecast is not simply the projection of future business. It is a request for product and resources that ultimately affects almost every decision the company makes. That means decisions by sales, finance, manufacturing, logistics and marketing are all enhanced or diminished by the quality of the company’s forecast.
Although basic forecasting isn’t the sole factor, it is the main shaper of how a company serves its customers, capitalizes on opportunities and drives performance. Logility’s experience with hundreds of organizations across many industries shows that typical benefits from a 15% improvement in forecast accuracy can include a 15%+ reduction in inventory, a 10%+ service level improvement, and a 20% increase in order fill rate. Better forecasting is one of the few core competencies that can drive a business agenda. Frustratingly, many companies suffer from common shortcomings that impair their ability to move beyond a basic level of accuracy, where forecasts based only on rules of thumb and simple math are applied to all products in the portfolio.
This white paper explores the common barriers that often stand in the way of an organization moving beyond basic forecast accuracy, and provides suggestions to break through them.