04 Feb 2022

The Next Big Thing in Forecast Accuracy

The Next Big Thing in Forecast Accuracy

My (Our) practical experience NOT just an opinion - of course, this post is not meant for experts who neither believe in forecast accuracy nor in measuring or creating point forecasts.

Repeatedly our best ROI has been on the clients who have belonged in the class 25% - 50%. With diligent effort across the board, we have been able to lift this group to 70+ and a couple of our clients over the 85% threshold.

The effort includes -

* Refine the process
* Understanding the purpose of forecasting and identify where NOT to forecast or mess with
* Implement the process/tool to create a good Statistical baseline forecast
* Revamp the organization to hire the right skillsets
* Training on the process and the tool
* reinforcement on a monthly basis to both evaluate the Stat forecast as well as the Demand Consensus process

I would say this group (25-50) is the sweet spot - because so many simple things are messed up. It would be amazing to the external eye how much basic stuff is missing - how common sense becomes a rare commodity when your back against the wall with the everyday "busy" stuff.

How simple? - you will typically see a straight line forecast in the system when the data shows a clear pattern.


And no one noticed because the planners didn't know how to set up a graphical view in the system. And no one looked at the entire time series as a graph. They only focused on the next month or next two months and manually re-created the seasonality.


And some clients are willing and adaptable to change and produce great results. A few just don't want to given the culture or management style or other pressures - unfortunately, we cannot help them. Interestingly, their excuse is "Oh our business is complex and hard to forecast!" It is a pity they will stay that way for a while. And now we have taken on a client who is in Sujith's "Very poor" bucket! We will turn them into World Class in a few months...


Now that is a challenge I love! this is a fun field....


Be well! And keep forecasting - put the effort to observe, cast and measure!

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