The role of the forecasting process in improving forecast accuracy and operational performance
Several operations decisions are based on proper forecast of future demand. For this reason, manufacturing companies consider forecasting a crucial process for effectively guiding several activities and research has devoted particular attention to this issue. This paper investigates the impact of how forecasting is conducted on forecast accuracy and operational performances (i.e. cost and delivery performances). Attention is here paid on three factors that characterize the forecasting process: whether structured techniques are adopted, whether information from different sources is collected to elaborate forecasts, and the extent to which forecasting is used to support decision-making processes. Analyses are conducted by means of data provided by the fourth edition of the Global Manufacturing Research Group survey. Data was collected from 343 companies belonging to several manufacturing industries from six different countries. Results show that companies adopting a structured forecasting process can improve their operational performances not simply because forecast accuracy increases. This paper highlights the importance of a proper forecasting-process design, that should be coherent with how users intend to exploit forecast results and with the aim that should be achieved, that is not necessarily improving forecast accuracy.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Franses, Philip Hans & Legerstee, Rianne, 2009. "Properties of expert adjustments on model-based SKU-level forecasts," International Journal of Forecasting, Elsevier, vol. 25(1), pages 35-47.
- Diebold, Francis X., 1989.
"Forecast combination and encompassing: Reconciling two divergent literatures,"
International Journal of Forecasting,
Elsevier, vol. 5(4), pages 589-592.
- Francis X. Diebold, 1989. "Forecast combination and encompassing: reconciling two divergent literatures," Finance and Economics Discussion Series 80, Board of Governors of the Federal Reserve System (U.S.).
- Remus, William & O'Connor, Marcus & Griggs, Kenneth, 1995. "Does reliable information improve the accuracy of judgmental forecasts?," International Journal of Forecasting, Elsevier, vol. 11(2), pages 285-293, June.
- Everette S. Gardner, 1990. "Evaluating Forecast Performance in an Inventory Control System," Management Science, INFORMS, vol. 36(4), pages 490-499, April.
- Moon, Mark A. & Mentzer, John T. & Smith, Carlo D. & Garver, Michael S., 1998. "Seven keys to better forecasting," Business Horizons, Elsevier, vol. 41(5), pages 44-52.
- Kekre, Sunder & Morton, Thomas E. & Smunt, Timothy L., 1990. "Forecasting using partially known demands," International Journal of Forecasting, Elsevier, vol. 6(1), pages 115-125.
- Lawrence, Michael & O'Connor, Marcus & Edmundson, Bob, 2000. "A field study of sales forecasting accuracy and processes," European Journal of Operational Research, Elsevier, vol. 122(1), pages 151-160, April.
- Zotteri, Giulio & Kalchschmidt, Matteo, 2007. "Forecasting practices: Empirical evidence and a framework for research," International Journal of Production Economics, Elsevier, vol. 108(1-2), pages 84-99, July.
- Charles C. Holt & Franco Modigliani & Herbert A. Simon, 1955. "A Linear Decision Rule for Production and Employment Scheduling," Management Science, INFORMS, vol. 2(1), pages 1-30, October.
- Moon, Mark A. & Mentzer, John T. & Smith, Carlo D., 2003. "Conducting a sales forecasting audit," International Journal of Forecasting, Elsevier, vol. 19(1), pages 5-25.
- Sanders, Nada R. & Manrodt, Karl B., 2003. "The efficacy of using judgmental versus quantitative forecasting methods in practice," Omega, Elsevier, vol. 31(6), pages 511-522, December.
- Sanders, Nada R., 2009. "Comments on "Effective forecasting and judgmental adjustments: An empirical evaluation and strategies for improvement in supply-chain planning"," International Journal of Forecasting, Elsevier, vol. 25(1), pages 24-26.
- Clemon, Robert T & Winkler, Robert L, 1986. "Combining Economic Forecasts," Journal of Business & Economic Statistics, American Statistical Association, vol. 4(1), pages 39-46, January.
- Dalrymple, Douglas J., 1987. "Sales forecasting practices: Results from a United States survey," International Journal of Forecasting, Elsevier, vol. 3(3-4), pages 379-391.
- Enns, S. T., 2002. "MRP performance effects due to forecast bias and demand uncertainty," European Journal of Operational Research, Elsevier, vol. 138(1), pages 87-102, April.
- T. S. Lee & Everett E. Adam, Jr., 1986. "Forecasting Error Evaluation in Material Requirements Planning (MRP) Production-Inventory Systems," Management Science, INFORMS, vol. 32(9), pages 1186-1205, September.
- Fildes, Robert & Goodwin, Paul & Lawrence, Michael & Nikolopoulos, Konstantinos, 2009. "Effective forecasting and judgmental adjustments: an empirical evaluation and strategies for improvement in supply-chain planning," International Journal of Forecasting, Elsevier, vol. 25(1), pages 3-23.
- Klassen, Robert D. & Flores, Benito E., 2001. "Forecasting practices of Canadian firms: Survey results and comparisons," International Journal of Production Economics, Elsevier, vol. 70(2), pages 163-174, March.
- Wright, George & Lawrence, Michael J. & Collopy, Fred, 1996. "The role and validity of judgment in forecasting," International Journal of Forecasting, Elsevier, vol. 12(1), pages 1-8, March.
- Frank Chen & Zvi Drezner & Jennifer K. Ryan & David Simchi-Levi, 2000. "Quantifying the Bullwhip Effect in a Simple Supply Chain: The Impact of Forecasting, Lead Times, and Information," Management Science, INFORMS, vol. 46(3), pages 436-443, March.
- Kalchschmidt, Matteo & Zotteri, Giulio & Verganti, Roberto, 2003. "Inventory management in a multi-echelon spare parts supply chain," International Journal of Production Economics, Elsevier, vol. 81(1), pages 397-413, January.
When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:131:y:2011:i:1:p:204-214. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.