 |
Forecast accuracy analysis and improvementin sales forecasting and demand analysis |
| Home | Training | Consulting | Case studies | Contact | About Us | Links |
Forecasting accuracyForecast accuracy |
 |
|
< Back to
Consulting Services Home Page
Forecast accuracy measurementMeasurement of forecast accuracy is important for the calculation of safety stock, to ensure that the sales forecasting system is under control and to investigate existing or potential problems in the supply chain. A range of measures can be used including simple summaries, exception reports, alert lists, error distributions and average accuracy reports such as WMAPE. Weighted Mean Absolute Percentage Error (WMAPE) reports are particularly useful. They give a concise measurement of forecast accuracy that can be used to summarise performance at any detailed level (e.g. SKU) across any summary level (e.g. total business). They are used for forecast accuracy monitoring and in KPIs. Click here to request a free copy of the Guide to Forecast Accuracy Measurement Forecast accuracy health checkA review of methods and procedures can be carried out together with an analysis of the levels of forecasting accuracy that are being achieved in the current sales forecasting system. Forecasts can be checked for bias. In a full analysis, a forecast simulation can be set up using powerful sales forecasting software in order to compare the forecast accuracy thus achieved with that from existing methods. The health check can be an important component in the early stages of a sales forecasting improvement program. Click here for a case study on forecast accuracy analysis. Forecast accuracy and biasA detailed analysis of forecasting accuracy and the way the errors are distributed reveals a great deal about the well-being of the sales forecasting system. Sales forecasts should not be biased i.e. persistently too high or too low. Control charts can be set up to ensure the sales forecasting system is under control. The forecast accuracy that can be achieved is different for every business and varies with the level of detail at which it is measured . Regular monitoring against appropriate KPIs is vital to ensure a direction of continual improvement.
• Training courses and workshops |
