Why and What Should You Forecast?

Generating a statistical forecast, by whatever means, is not the same as creating a demand plan in your business, it is only the first part of a four-part process.

Over the 30 years I have visited and worked with about 300 companies. One of the first questions asked is often “What is your budget for Demand Management in the business?” The response is often surprise as to the need for one and comments like, the salesmen are responsible for forecasts and they ‘suck-their-thumbs’ for half an hour at the end of the month, where is the need for a budget? It is amazing how many companies run their whole business based on a salesman’s thumb suck!

Demand management and coming up with a reasonable demand plan, is a key process in any business. If you don’t have a reasonable idea of all the demands on your business into the future, how on earth are you going to be able to plan the supply of resources in the form of materials, capacity and labour?

A business requires the best forecast it can for various reasons, including: