Impact of Poor Forecasting Accuracy

Though it is in many ways the backbone of an entire company, Forecasting is still handled by many organizations without supporting data or automation whatsoever. Additionally, many companies do not monitor their own forecasting accuracy. Even those that do, often do not fully go beyond the aggregate data and break down forecast accuracy by specific regions, platforms, time horizons, products and customers. Furthermore, how many of them understand how gross margin is affected by poor forecasting? This paper gives an overview of the SIOP process, and highlights the importance of forecasting accuracy on both this process as well as the company as a whole. Finally, the paper sheds light on how to calculate both forecast accuracy, as well as its effects downstream, and provides one case study where many of the explained issues arose.