Fundamental Issues in Business Forecasting

FUNDAMENTAL ISSUES IN BUSINESS FORECASTING By Michael Gilliland True demand is most difficult to measure, it will be easier to measure if a company fills all orders in full and on time, which is not often the case … you can make a significant improvement in forecasts, with little or no organizational resources, by identifying and eliminating steps and participants that make the forecast worse … forecasts are more often an expression of an organization’s targets or wishes. Forecasting is a difficult and thankless endeavor. When accuracy is not quite where everyone wants it to be, we react by making significant new investment in technology, process, and people. Unfortunately, investment in the forecasting function is no guarantee of better forecasts. There are often fundamental issues that impact an organization’s ability to forecast accurately. Until those issues are recognized and addressed, further investment in the function may be wasted. This article identifies several fundamental issues that should be of concern to organizations with a new forecasting function, and to those struggling to improve it. WHAT IS DEMAND? Perhaps the most fundamental question ...