Sales Forecast Accuracy

While Sales Forecast Accuracy could be considered a Business Measure, we believe it is so important that it should be listed separately. Most companies derive their Production Plans from the Sales Forecast. If the Sales Forecast is incorrect, inventory problems and/or customer dissatisfaction are the results. There are different types of sales forecasts such as POS, Orders, and Shipments. When performing Forecast Accuracy measurements, all of these forecasts and actual results need to be considered. The actual POS may be coming in as forecasted, but the actual Orders are below forecast because the retailer is reducing inventory. The actual orders are on track, but shipments are not because of inventory shortages, or other transportation issues. The sooner a company knows of a forecast deviation, the better chance it has of reacting to reduce or prevent the problem from occurring.