1. What are the various forecasting methods?
Forecasting methods are divided into two broad categories of qualitative methods and quantitative methods. Qualitative methods of forecasting are judgment based, opinion based, intuition based, emotions based, or personal experience of the individual conducting the forecast. There is no mathematical element in qualitative forecasting. On the other hand, quantitative forecasting methods rely on mathematical computations and objectivity. Qualitative methods of forecasting include; executive opinion, market survey, sales force composite, and Delphi method. Quantitative methods include; time series models and associative models (Hamlett).
2. Who will do the forecasting?
In a distribution company the supply chain manager or the inventory managers would be the two most important people involved in the forecasting procedure. The entire forecasting process is dependent upon the nature of the business. The inventory manager may have to foresee future demand patterns and make predictions in order to successfully create forecasts. However, assistance from other departmental managers, salespersons, and employee input may contribute towards the creation of effective forecasts (Schultz).
3. How will the forecasting methods be implemented?
The forecasting method adopted by the company should be closely tied to the budgets of the company (Vorster, 2012). The ties of the forecasting and budgeting would ensure the company is on the same level and in accordance to the expectations. The revenues, costs, and capital expenditure should be covered by the forecasting done by the specific manager of the company in order to achieve maximum benefit from the implemented forecasts. Moreover, forecasts should be flexible and easy to adapt to the changing trends in the market.
4. Why should EBBD spend any money on this new methodology? Why do we care about improving our forecasting and why is it worth the costs to improve it?
It is important to improve forecasting techniques because it helps the company to be prepared for future events. The organization may be able to determine where there is a need for extra resources and they may make resources available at the correct time. If the organization is unable to make effective forecasts they may have to face problems in the future and may lag behind competitors. In a competitive environment companies should be prepared to deal with sudden events otherwise competitors may take over. Even though short term costs may be high initially, but in the long term it is in the benefit of the company (UAM).
References
Hamlett, K. (n.d.). Various Sales Forecasting Techniques. Small Business. Retrieved June 15, 2014, from http://smallbusiness.chron.com/various-sales-forecasting-techniques-4695.html
Implementing a Forecasting Model. (n.d.). Entrepreneur. Retrieved June 15, 2014, from http://www.entrepreneurmag.co.za/advice/financial-management/financial-reporting/implementing-a-forecasting-model/
Schultz, R. L. (0). The implementation of forecasting models. Journal of Forecasting, 3(1), 43-55.
Seven Keys to Better Forecasting. (n.d.). UAM. Retrieved June 16, 2014, from http://www.uam.es/personal_pdi/economicas/rmc/prevision/pdf/seven_keys.pdf
