When to use Forecast and when NOT to

Sherman’s Law of Forecast Accuracy: “Forecast Accuracy improves in direct correlation to its distance from usefulness.”

The statistical forecast is only useful when determining a basis for segmentation, analyzing patterns and creating baseline forecasts. As a result, statistical forecasts about stock keeping units (SKUs) at the location level, for example, will always be inaccurate.

Sustaining a winning business position in a fast-moving and changing market demands agility and flexibility from an organisation. 
This does not mean reactivity, which is typified by the classic fire-fighting environment. It means planning for flexibility. In order to respond to changes in demand and to anticipate change, it is essential that businesses have integrated processes along with cross-functionally aligned behaviour focused upon the customer and the external market.

All organisations need to be focused upon creating an organisation that is totally focused upon the sweet spot of competitive advantage. If this is the case, then the organisation will see the value of demand planning.

Focus the demand planning process upon assumption management, not the forecast numbers, which are always the consequence of the assumption

Forecasting at a family level of aggregation will create a greater level of accuracy. It is important to forecast only at the level of detail necessary to support the decisions required to make at the time fence. In the short term, stock keeping unit level detail is essential information for detailed supply chain planning. However, in the long term, the focus only has to be capacity, people and long-lead-time strategic materials. Do not try to get the organisation to create detail at a micro level that will be more inaccurate and often not necessary to support the level of decisions required.