Top Forecasting Practices, Methods and Techniques - XenonStack

What is Forecasting?

Forecasting is a technique of predicting the future based on the results of previous data. It involves a detailed analysis of past and present trends or events to predict future events. It uses statistical tools and techniques. Therefore, it is also called as Statistical analysis. In other words, we can say that forecasting act as a planning tool that helps enterprises to get ready for the uncertainty that can occur in the future. Forecasting actually begins with management’s experience and knowledge sharing. To obtain the most numerous advantage from forecasts, organizations must know the finer details of the different types of forecasting methods, understand what an appropriate forecasting method type can and cannot do, and know what forecast type is best suited to a specific need. Lets list down some major benefits of Forecasting:

  • Better utilization of resources
  • Formulating business plans
  • Enhance the quality of management
  • Helps in establishing a new business model
  • Helps in taking best managerial decisions

How does Prediction Work?

Firstly, the daily data is fetched from the market once at a time in a day and update it into the database. Now, the prediction cycle along with learning developed with the use of newly combined data. Historical data collected and the learning and prediction cycle developed to generate the results. The prediction results obtained in the form of the various set of periods such as two days, four days, 14 days and so on.


Importance of Forecasting

Prediction of labor, material and other resources are highly crucial for operating. If the services are Predicting better, then balanced workload sheet may be appropriately planned before. Therefore, forecasting benefited in a variety of ways such as –

  • It provides reliable and relevant information about the present and past trends and future predictions that help in planning better.
  • It alerts to face the challenges of future events.
  • It helps in the use of production facilities efficiently.
  • It gives the confidence to take important decisions.
  • It helps in the handling of uncertainty efficiently.
  • It provides better services for customers.
  • It helps to utilize capital and resources efficiently.
  • It optimized the design of facilities and operation system.

Why Prediction Matters?

Accurate forecasting is essential for every manufacturer, retailer, the distributor in the industries. The critical benefits are –

  • Increased customer satisfaction.
  • Efficient optimization of inventory.
  • Better planning to reduce stock out and to overstock.
  • Efficient Production Scheduling.
  • Reduce the safety stock requirement.
  • Lowering the cost of near expiry products.
  • Improvement in pricing and promotion management.

How to Enable Forecasting?

Successful forecasting platform developed by a collaboration between the corresponding manager and forecaster. Therefore three main queries need to be cleared to choice the best forecasting technique for the particular problem.

Determine the process of using the technique required for determining the accuracy and the extent of the ability of techniques to meet the requirements for solving the problem.

Explore the dynamics and components of the system for which forecasting applied: It is useful for simplifying the relationship between the elements of the system. Hence, the forecaster able to develop the model to extract the facts and logic of the given situation which are highly important for forecasting.

Determine the importance of the past for estimating future – Current changes may change the overall patterns, and these changes can increase after a long period.

Categories of Forecasting Methods –

  • Qualitative Methods
  • Quantitative Methods

Qualitative forecasting techniques are subjective methods by the opinions of the customers and experts.


Forecasting Best Practices and Techniques

  • Create a Repeatable monthly process.
  • Focus on determining the relevant points such as Competitors sales data.
  • Amount of absolute stock – Frequency of data, Shipments, Orders.
  • Integration with the respective channels of sales.
  • Measuring the forecasting accuracy at the Location and the Customer Planning Level.
  • Maintenance of Real-Time and updated data.
  • Integration of forecasting with management practices.
  • Developing collaborative processes.
  • Developing forecasting as a continuous process.

Top Forecasting Tools

  • Demand Works – It is precisely for the management of the inventory, capacity, sales and operational planning.
  • QuickBooks – It is a platform to generate the trend, and forecasting reports that further helps in improving the financial and budgeting services.
  • Tableau – It is useful for predicting Business Intelligence goals.

A Predictive Approach

Prediction Techniques and Methods help Enterprises to meet demand management goals, Increase customer satisfaction and better utilization of resources. To know more about Predictive Forecast, we advise taking the subsequent steps –


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