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The hidden cost of “good enough” forecasting
The uncomfortable truth is that many companies are measuring forecast accuracy at the wrong level.
While your C-suite sees strong quarterly numbers, at the supply chain execution level where service and inventory happen, forecast accuracy is much lower.
Why traditional forecasting is failing in today’s market
Your forecasting challenges aren’t unique. According to Gartner research, forecast accuracy directly impacts critical service metrics across industries. Yet, some companies still rely on historical data to predict an increasingly unpredictable future.
The problem compounds at every level:
At the executive level
- Accuracy: 77%
- Used for production planning and materials purchasing
- Creates false confidence in forecasting abilities
At the planning level
- Accuracy: 69%
- Used for inventory planning and production sequencing
- Misalignment starts to show
At the execution level
- Accuracy: 50% or lower
- Where fulfillment, deployment, and logistics happen
- Where most service issues actually occur
The demand sensing advantage: Real results, real impact
Smart companies are moving beyond traditional forecasting to demand sensing – using real-time data like orders, shipments, POS data, and channel inventory to create accurate, actionable forecasts. The results speak for themselves:
Increased forecast accuracy
Less unproductive inventory
Improved customer service levels
Reduced working capital
Higher earnings
Greater shareholder value
The two-pronged value creation model
Demand sensing creates shareholder value through two powerful mechanisms:
Capital efficiency
When forecasts are accurate, you need less safety stock. Less inventory means lower working capital requirements, reduced expediting costs, and lower transshipment expenses. The math is simple: same profits with fewer assets equals higher returns.
Operating profit
Accurate forecasts ensure the right products are in the right place at the right time. This means fewer lost sales, reduced expediting costs, and lower transshipment expenses. Higher sales plus lower costs equals improved operating profits
Get the complete demand sensing strategy
The companies winning in today’s market are forecasting differently. They’re using current market signals instead of historical patterns. They’re sensing demand instead of just predicting it.
In this white paper, you’ll learn:
- Step-by-step implementation strategies that deliver results
- Real case studies showing ROI
- How to build the business case for demand sensing technology
- Which metrics matter and how you can move beyond traditional accuracy measurements
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