Worst Practices in Forecasting

Jan. 11, 2008

Sometimes the pursuit of "best in class" is a losing proposition.

The most fundamental worst practice, says Mike Gilliland, product marketing manager at SAS Institute, is to assume things work without bothering to measure them. "This can occur when purported 'best practices' are implemented without solid evidence that they are even a 'good' practice." Speaking at the recent APICS Conference in Denver, Gilliland listed some of the other most prevalent worst practices:

having unrealistic accuracy expectations
setting inappropriate performance targets
employing overly elaborate systems or processes
using inappropriate statistical models due to over-fitting to history, or "pick best" selection software
not utilizing a naive forecast
political tampering with statistical forecasts
blaming the forecast for all business woes.

Questioning the conventional wisdom, Gilliland asks, "How good do you really have to be at forecasting?" For many companies, he observes, achieving "best in class" forecasting could very well be a waste of resources if the company's major challenges lie in other areas. "By eliminating the worst practices in their forecasting efforts," he explains, "companies should be able to forecast as accurately as can reasonably be expected and achieve this as efficiently as possible."

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Dave Blanchard | Senior Director of Content

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During his career Dave Blanchard has led the editorial management of many of Endeavor Business Media's best-known brands, including IndustryWeek, EHS Today, Material Handling & Logistics, Logistics Today, Supply Chain Technology News, and Business Finance. He also serves as senior content director of the annual Safety Leadership Conference. With over 30 years of B2B media experience, Dave literally wrote the book on supply chain management, Supply Chain Management Best Practices (John Wiley & Sons, 2010), which has been translated into several languages and is currently in its second edition. He is a frequent speaker and moderator at major trade shows and conferences, and has won numerous awards for writing and editing. He is a voting member of the jury of the Logistics Hall of Fame, and is a graduate of Northern Illinois University.