Leading indicator forecasting
The days of traditional forecasting are gone. Many of us are completely out of sync with what is driving demand due to the covid crisis. Before, we focused on predicting demand 6-12 months out. Today, companies want to understand where their demand will be going 1-3 months out. The ‘normal’ indicators and ‘normal’ relationships in a ‘normal’ economic situation are of little use. So we’re done with the gut feeling. We’re now looking for a new set of indicators that can explain to us where the market is going.
How does it work?
Let’s start by clarifying what is driving demand over the next 2-3 months, and then use that same approach to refine where demand is going over the next 6-12 months, once we get out of the storm. Gut feeling is good, but going forward let’s complement it with data.
A good model will challenge the gut feeling, and a good gut feeling can challenge the model. The combination of the two always leads to a better result.
I believe the second wave of COVID19 is the doomsday for traditional forecasting. The doomsday we may have been waiting for.
Find out how you can improve your forecasting practices! In this E-book, we show you how including external market data, improves forecast accuracy tremendously. Outperform your competitors by using quantified market data in your demand planning and learn what drives your sales.
- Why it is important to look outside your company
- How external data can improve your forecast
- How external data improves strategic decisions
- Market intelligence – the next level
Leading Indicator Forecasting