Low-hanging Fruit: (Easily) Avoidable Error
S&OP Process Owner of a large enterprise approached me recently. He felt their forecast error was trending higher than warranted; and he was looking to reduce the error by 10%. I had a couple questions for him straightaway: how do you know your demand planners can do any better in this volatile environment; and assuming they can, how do you know if 10% is the right target? He agreed he had a gut feel, but no analytical support to back-up his concern or his improvement target.
Are you in a similar position? Are you confident your demand planning process has pushed out all avoidable error? Do you know what part of your current forecast error is avoidable?
If there is room for improvement, how much error you think can be reduced? Does your forecasting software provide a forecastability benchmark: highest error you should tolerate vs. lowest error you should strive to achieve?
Forecast Value Add FVA only compares against the worst error (from Naive Forecast), this provides no clue how far off you are from the best (lowest) error possible.
Learn how to identify the lowest level of error achievable: through an AI-powered optimal blending process that takes the best from all possible forecasts across:
- a rich range of forecast models (both traditional & ML/DL models as well as driver-based models)
- all product / location / customer hierarchy combinations (Forecast Level Optimization or Hierarchical Forecasting)
- all time buckets: weeks/months/quarters (Temporal Aggregation)
- all lags (to understand what drives an accurate forecast in the short-term vs. mid-term), and
- all human and machine signals: to autonomously determine optimal weights to assign to each human signal from Sales, Sales Management, Marketing, Demand Planners, Finance, Executives; and to each AI signal.
Now you can internally and effortlessly benchmark your forecasting performance and confidently set & deliver forecast accuracy improvement targets in a data-driven manner. You could reduce 10-30% error or more in just a few weeks with a quick Proof of Value (POV) engagement. Send us an email at info@vyan.ai if you would like to learn more.
