Seven Aphorisms Of Business Forecasting

SEVEN APHORISMS OF BUSINESS FORECASTING By Michael Gilliland Forecastability of demand depends very much on how stable the demand is … the higher the volatility in demand, the greater the forecast error … shows how you can reduce demand variations … identify and eliminate non-value adding activities. Forecasting is a fundamental business task, yet few companies perform it efficiently — or at least not as efficiently as they would like! If our attention is misdirected to the current fads, hype, and peripheral issues, we can lose focus on the fundamentals that truly impact effective forecasting. This article provides a few basic guidelines for business forecasting in the form of aphorisms — concise statements of principle. These seven statements as well as their corollaries and lessons are meant to raise awareness of underlying issues and direct effort into key areas for improvement. APHORISM 1 Forecasting is a huge waste of management time. This is not to imply that forecasting is unnecessary and should be eliminated. Clearly, good forecasts can help a company become more effective in utilizing its resources and satisfying its customers. Rather, this aphorism is meant ...