Anytime processes are involved in forecasting, there’s the danger that the forecast will be shaded by one of four myths. These myths exist primarily because of the perceived need for forecasting to be complicated and outliers to be eliminated. This is particularly true with off-the-shelf retail supply chain software. Here are four of those myths and why they’re not accurate.
Data is Infallible
It’s this notion that has doomed many Major League Baseball teams and the those who thought recreating dinosaurs in the movie Jurassic Park was a good idea. While data and retail supply chain management software are tools, they’re only tools and one ignores experience and even gut feelings at one’s own risk. Data sheds light on trends, but that’s all. It’s, as in the case of both examples, only valuable as a record of past history, not future performance.
Complexity is Always Better
Another myth is that complexity equals forecasting accuracy. In fact, often, the more variables that are included in retail supply chain management software, the greater the possibility mistakes factor into forecasts and long-term trends get missed. The other risk is that too much data leads to decision making becoming a victim of that data. Decisions are bogged down because individuals reviewing the data are looking for “one more example.”
Consensus is Not Always a Trend
An approach that has emerged since data became prominent is that if there’s a trend of a belief within an industry, it must be true. Often, it is. Sometimes, it’s not. The “herd” has been wrong before. One recent example was the assumption many automakers made that Americans were willing to give up SUVs because of environmental concerns, even if the alternative was smaller and cost about the same.
Involvement Means Better Forecasting
This line of thinking goes that sales personnel can pick trends better because they’re “close to the customer.” That certainly can be true, but not always, particularly if a product is an emotional buy or a business or company is emotionally invested in a product or service.
Forecasting the future is never easy, nor is it a science, even with the best retail supply chain software. Myths that become pervasive make it even more difficult. Do you have experience with any of these myths? Contact CBX Software and let us know.