The Importance of Segmenting Your Products

Why should a company consider forecastability when applying forecast methods? Doesn’t a company’s demand forecasting system conduct automatic diagnostics and apply the appropriate forecasting method? Treating every data the same way may decrease the accuracy of the forecasts, as you might apply only one method across the product portfolio, not realizing that each group of products has different data patterns, based on how they were sold and supported over the product’s life cycle. It is also important to educate senior managers in the company on forecast accuracy expectations based on data availability, value set by the company, and method chosen.