Benefits of forecasting that can be communicated with the management are numerous:
– Budgeting, planning, production, inventory control, marketing, advertising, sales projections, investment, etc.
– Improve profits
– Eliminate Waste: Inventory shortages, missed due dates, lost sales, lost customers, expensive expediting, missed strategic opportunities.
Forecasts to Management: Pay attention to:
– Why is the forecast needed.
-Who will use the forecast.
-Participation of management is needed in the initial stage.
– Related problems and concerns.
– Good forecast incorporates feedback from management.
– Forecasters and managers should pay attention to: Poor data system.
– Risk of Lack of commitment on the middle management.
– Forecast should be available on a timely fashion, but often is NOT. Should define what an adequate one is.
– If inaccurate model is used, the analyst should inform the management asap, rather than just hiding it.
– The forecasting unit should be an integrated part of the organization structure.
– Analyst should pay attention to political and human relations skills when communicating the forecasts. Because forecasting has implications on the strategy.
– Protect the integrity and objectivity of the forecast.
– Recommendations from Bails and Pepper 1993:
– Become familiar with who use the forecast
– Learn about the user’s concerns.
– Defend your forecast against political concerns.
for further interesting readings: