Qualitative Sales Forecasting

During a visit with one manufacturer, we interviewed an analyst who was responsible for generating the sales forecasts used by logistics and production. As we began discussing the sales forecasting process used by his department, he explained that at the beginning of each month, he generated a quantitative forecast for the coming month for each product (SKU) and then examined the forecast to see if it needed to be adjusted. He explained that he made adjustments to each SKU forecast based on his knowledge of each item's behavior, information he obtained from marketing regarding upcoming promotions, and information he obtained from the employees responsible for handling orders from the company's distribution centers. In all, this single employee inspected and qualitatively adjusted between 200 and 300 SKUs each month! His insights into the business environment surrounding each product dramatically improved the forecasting accuracy for each, but involved an incredible amount of information gathering on his part. Equally important, no one else in the organization seemed to realize the incredible resource to be found in this individual's knowledge, nor what would happen to forecasting accuracy (and production and logistics planning) if he left the company.