There’s no doubt about it: demand planning is complicated. And while most everyone understands its importance, very few succeed in fully grasping the nitty gritty of how to go about it effectively. Yet complete mastery isn’t out of reach.
For over twenty years, we’ve helped countless companies implement cost-effective and flexible solutions that improve forecast accuracy, enhance collaboration, and optimize inventory. Our Forecast Xperts have seen it all. And we’ve come across plenty of novice and expert demand planners who are hungry for more information.
Unfortunately, we’ve also noticed that many of your questions don’t get very much coverage online. So in an effort to remedy this and provide you with the information you need to succeed, read on for ten questions we get from customers all the time and our expert opinion on them.
Today's Question: How often should I be developing my forecasts? Daily, weekly, monthly, or quarterly?
This answer is to this question may not be the same for everyone but most will arrive at the answer having taken the path.
It depends. Businesses tend to do a mix of short-, medium-, and long-term forecasting. And how often you develop your forecasts ultimately depends on your industry and what you hope to gain.
Quarterly forecasts are suited to longer-term strategic planning. They shouldn’t be too segmented or granular and are best for providing insight into overarching trends and general demand levels. Yet forecasting on a quarterly basis makes it difficult to effectively respond to market fluctuations, which leaves customers frustrated and hurts your bottom line.
Daily forecasts, on the other hand, can be useful but generally have a low return on investment. They keep demand planners so busy forecasting that there’s little time to do much else. The sweet spot, then, for most businesses lies in producing both general quarterly forecasts and more detailed monthly forecasts — or if your market is extremely volatile, weekly ones.
And what about rolling forecasts? They add enormous value since key stakeholders can monitor factors affecting demand and adjust to fluctuations as they occur. Nevertheless, the process can be time- and resource-intensive, so smaller businesses may find it too costly to be feasible. This is where using a software solution with robust forecasting and automation features can make a huge difference.