A mountain of research today shows that improving forecast accuracy delivers a high ROI. Improved forecast accuracy, when combined with software that translates the forecast into demand driven events, will decrease inventory and operating cost, increase service and sales, improve cash flow and GMROI, and increase pre-tax profitability.
Lowering Inventory and Raising Sales at the Same Time
Many people are conditioned to accept mediocre demand forecasting accuracy. The most common excuses I hear for keeping inaccurate forecasting include: “We paid a lot of money for the software” and “The software does a good job with other operations.” The irony is that the same people, when asked if they shopped for better software, will respond no. The explanations range from they do not see the value to disbelief – there isn’t a better demand forecasting solution in their market. Businesses have reacted for the last 20 years by placing more value on the plan, a top down approach that costs more money and has lower returns.