However, to get truly valuable insights from measuring forecast accuracy you need to understand:ġ. It is an important tool for root cause analysis and for detecting systematic changes in forecast accuracy early on. We are, of course, not saying that you should stop measuring forecast accuracy altogether.
(You can read more about how this can be seen in a store replenishment context in a recent master’s thesis commissioned by RELEX.) Oftentimes the importance of accurate forecasting is truly crucial, but from time to time other factors are more important to attaining the desired results. Secondly, although forecasting is an important part of any planning activity, it still represents only one cogwheel in the planning machinery, meaning that there are other factors that may have a significant impact on the outcome. We need to keep in mind that a forecast is relevant only in its capacity of enabling us to achieve other goals, such as improved on-shelf availability, reduced food waste, or more effective assortments. Firstly, because in any retail or supply chain planning context, forecasting is always a means to an end, not the end itself. Unfortunately, we feel that isn’t the right question to ask.
“What would you consider a good level of forecast accuracy in our business?” is probably the single most frequent question we get from customers, consultants and other business experts alike. Introduction: What is a Good Level of Forecast Accuracy?
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