Sunday, November 19, 2006

Business Forecasting -- missing an opportunity

I'm amazed at the number of companies that miss a key way to serve their customers better and make more money. Better forecasting is a key "lever" in the process of improving business performance with both top line and bottom line impact. Top line revenue grows the better you match what you have to what the customer wants, and where they want it. A good forecasting process will do just that -- and it will give you an early warning when business starts to trend down. Bottom line also benefits by giving your manufacturing team a more stable plan and producing less waste.

Companies continue to treat this group as a "clerk" position and perhaps they throw some tools at the group. The best companies will seed the team with key business experts and people who understand the forecasting process from a mathematical perspective.

For companies that are "average" in tracking forecast error, the opportunity is large - about 2% of revenues - so a $100M USD company could drop $2M to their profits. I talked to one $1B+ company that didn't even track forecast error - a great opportunity for their new CIO to save the company a great deal of money.

1 comment:

sethu sekhar said...

Great Point ! Well Said

- Sethu