Benchmarking Sales Forecasting Performance Measures

BENCHMARKING SALES FORECASTING PERFORMANCE MEASURES By Kenneth B. Kahn Although different companies use different measures to evaluate the performance of forecasts, mean absolute % error (MAPE) is the most popular one by and large, error is the lowest on an industry level, and the highest, on a location level satisfied companies are more likely to measure forecast accuracy than others. There has been a lot of interest lately in determining benchmarks for sales forecast accuracy. However, present benchmarks are mostly aggregated across industries and do not distinguish between the ways for calculating accuracy. Consequently, present benchmarks do not offer clear benchmarks for accuracy on an industry and/or performance measurement basis. In an attempt to clarify such benchmarks, a study was undertaken by Georgia Tech’s Marketing Analysis Laboratory. Like previous studies, the study intended to determine what methods companies are using to calculate forecast accuracy, what degrees of forecast accuracy are being achieved, how forecast accuracy is being reported, and what factors appear to drive forecast accuracy. However, unlike previous studies which have mostly aggregated ...