Fundamentals of business forecasting

Published on May 31, 2023   34 min
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Hello, my name is Eric Wilson. I'm the Director of Thought Leadership with the Institute of Business Forecasting. It's a worldwide membership organization, 55,000 members worldwide, about fostering the growth of business forecasting, demand planning, S&OP, and related fields. Today's topic is the fundamentals of business forecasting and demand planning.
Business forecasting and demand planning. Your mission, or the mission of anybody in this field. Business forecasting is a process of using analytics, data, insights, and experience to make predictions and respond to various business needs. It's really knowing what is going to happen in the future, providing the best assessment of that demand and predictions that people can use in making better decisions. It usually applies across the entire organization, as far as the customer service, to be able to figure out how much inventory we need, to have products at the right place, at the right time, to be able to achieve company goals, to be able to optimize supply chains and other problems, as well. It's able to impact your revenue, impact your profitability, and impact your cash inside of an organization.
There's a lot of great benefits in improving forecast accuracy and getting it right. IBF has done a lot of research, and a 15% improvement on forecast accuracy is about a 3% improvement to the bottom line. Fifteen percent improvement on forecast accuracy means improving inventory and improving cash by anywhere from 10% to 12%. A 15% improvement on forecast accuracy means a topline growth of 1% to 2%. You're able to make better decisions, but it improves the bottom line for an organization, as well.