Reference class forecasting

People routinely forecast optimistically, they under-forecast costs, and over-forecast outcomes. We have all seen it happen repeatedly in businesses and the public sector, most of us have seen it on  personal level.

Demand planning is the core of effective operational optimisation, and differs from simply sales forecasting, in that it looks at the drivers of demand, rather than drivers of sales, often a big difference, and it is free of the bogy of just assuming the past will be repeated, even if massaged by some fancy algorithm.

Demand planning has been enhanced by the developments in what are in effect benchmarking of similar situations, collectively called Reference Class Forecasting by its Nobel prize winning proponents,  Daniel Kahneman and Amos Tversky.

Demand planning is hard to do well, but most useful things are.

About strategyaudit

StrategyAudit is a boutique strategy and marketing consultancy concentrating on the challenges of the medium sized manufacturing businesses that make up the backbone of our economy. The particular focus is on their strategic and marketing development. as well as the business and operational efficiency improvements necessary for day to day commercial survival. We not only give advice, we go down "into the weeds" to ensure and enable implementation.
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