Forecasting: understand the components of your demand

Forecasting is often the poor relation in planning, but weak forecasting leads directly to inefficient schedules, forcing the real-time function to work harder and make more on the day changes. Read on to check whether you are getting your forecast as accurate as possible.

The key to creating accurate forecasts is not setting an accuracy target – such as the much-quoted 5% – but learning how to improve forecasts, by understanding what’s possible with our data sets. It’s also important to identify what each percentage improvement would gain us in terms of resource cost or risk avoidance.

This article introduces two methods to utilise when reviewing forecasting models – one to check what accuracy is possible and one to improve accuracy by looking at both historic (seasonal) and causal (trend-cycle) data separately. As an industry, we need to learn from tried and tested forecasting methodologies, which can offer real insight into what is driving our business.

Read the full article.

First published in the 2013 Best Practice Guide Putting People First.

View the slides  from the conference session on this topic.

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