Answers To Your Forecasting Questions

answers to your forecasting questions q. How good has demand forecasting been so far? What is the level of accuracy? a. Considering where demand forecasting was 20 years ago and where it is now, we have made significant progress. Forecasting is becoming more scientific and less intuitive. The level of accuracy varies from one industry to another and from one product to another. Also, it depends on whether we are talking about accuracy on a product level or on a category level. Accuracy at a product level is generally much lower than at a category level. The forecast horizon (how far ahead you forecast) also makes a difference. Accuracy goes down as we forecast farther into the future. Based on the recent survey, the accuracy of a SKU, one-month-ahead forecast (all industries combine), is 71%; for a category, 84%. q. I am the Global Demand Management Director. We are working on reducing our product creation lead times from 18 months to 14 months. I expect there is a relationship between lead-time reduction and forecast accuracy. Do you have any data to support this? In other words, for every month closer to market, can we expect some improvement in forecast accuracy? a. Forecast ...