Gartner Research

How Good Is Your Forecast?

Published: 11 February 2011

ID: G00210260

Analyst(s): Noha Tohamy , Debra Hofman

Summary

Improving demand forecast accuracy is the most effective way to reduce supply chain costs. However, many companies are unsure how to do this given the inherent variation of demand. This research describes what a good forecast really is, how to measure it and how to achieve improvements.

Table Of Contents
  • Overview
  • Key Finding
  • Leaders Focus on Continuous Improvement
    • The Development of an Initial Forecast
    • The Impact of Collaborative Forecasting
    • Measure Management Overrides
  • Three Types of Demand Forecasts
  • Three Criteria for a Good Forecast
  • Why Do the Three Criteria Matter?
  • Meaningful and Representative: Does the Forecast Effectively Model Customer Demand?
  • Accurate: Is the Forecast Accurate, Timely and Reliable?
    • Forecast Error
    • Bias Measurement
    • Variance
    • Forecast Lags
    • Forecast Granularity
  • Actionable: Is the Forecast Useful to Different Internal Stakeholders?
  • Creating an Integrated Demand Signal Through Collaborative Forecasting

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