Long-term forecasting not reliable, study shows
Jan 1, 2008 12:00 PM
Detailed forecasting and planning are not necessary over the long-term, and can lead to less accurate results that require more work to obtain them, finds a study by Supply Chain Consultants (SCC).
In its report on the study, Forecast Less and Get Better Results, SCC says that in today's era of lean manufacturing and sales and operations planning (S&OP), the need for “a highly detailed long-term forecast is not necessary. Instead, an aggregate planning tool that only uses detailed analysis for a short-term plan produces more valid results with better indicators of the future.”
The report challenges conventional forecasting and planning wisdom that states that “companies need to project forecasts and plans far into the future at a detailed, highly granular level.” Rather, the Wilmington DE-headquartered supply chain management software and services company says, performing detailed analysis only for short-term planning provides greater results with less work.
The payback includes more well-founded results with projections that offer better indicators of the future, and the ability to more easily focus on big-picture issues, including economic indicators, competitors, market share changes, new product launches, and end-of-life issues.
