Benchmarking the Forecasting Process

Article defines the forecasting process and explains where the forecasting function resides. It emphasizes the importance of multi-department collaboration on forecasts and differentiates between one number versus multi-number forecasts. How far ahead to forecast (forecast horizon) depends on the lead-time, that is, how far ahead a decision has to be made. The article also reports on how far out companies in different industries lock their production plan (that is, set a period in which no change can be made in the plan), as well as revise forecasts. Holding a forecast consensus meeting and offering incentives to improve forecast accuracy are recommended.