Why do forecasts fail? How do you recommend improving the results? What tools would you use? These are very important questions that you should ask yourself when making, monitoring, and updating a forecast. The answers to these questions will help you make a more accurate forecast or help you update or fix a forecast that may already be in place.
Forecasts in their own nature are expected to have some type of error but with the correct techniques it can be measured and monitored. Some factors that contribute to forecast error include: inappropriate forecasting method, lack of participation and accountability, too difficult to understand, lack of compatibility between system and organization, inaccurate data, data inappropriate for forecasting, and lack of monitoring. For example, monitoring the forecast is a very important task in order to track actual demand against projected demand and yet there are still companies that do not check the accuracy of the forecast. It baffles me to think that a company would invest the time and money to create a forecast but not use it for what it is intended to do. This could create a big problem especially since there is no way to establish targets for improvement.
Improving the results of a forecast takes time and knowledge of all factors involved. Developing a forecast process would be the first initial step that I would take before making any forecast. Taking this step will help to assure that I have all the required information and all the right personnel involved in order to develop a good forecast. It is also important to have a good forecasting software program that will work with the order entry and the master scheduling programs as well.
If I am working with a forecast that is already in place but needs to be adjusted to improve the results. I would focus on reducing forecast error, it will then increase forecast accuracy. Although both factors accentually mean the same thing if you focus on reducing the...
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