Gartner Research

Understand Forecast Error Measures to Improve Your Demand Planning Process

Published: 30 November 2016

ID: G00304346

Analyst(s): Marko Pukkila


Most companies with formal demand planning processes measure forecast error. Few actually use the results to add business value. Supply chain leaders can use this research to understand how to use the forecast error measure for demand planning process improvements.

Table Of Contents
  • Key Challenges



  • Define What Makes Demand Forecast 'Good Enough'
  • Use Weighted Forecast Metrics With Diverse Demand Patterns
  • Categorize Demand by Forecastability
    • Identify Statistically Hard-to-Forecast Items
    • Identify Products That Require Demand Planner Attention Based on Forecast Performance
    • Focus First on the Root Causes of Big Errors
    • Enlist Sales to Collaborative Forecasting
  • Leverage Demand Shaping

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