THE FINANCE TRANSFORMATION: Paying for Forecast Accuracy Is Costly

September 3, 2009

by Steve Player

As companies implement rolling forecasts to steer their organizations, they often also begin the practice of "paying for forecasting accuracy," which is "one of the dumbest things management can do," according to budgeting expert Steve Player. He explains why in this Big Fat Finance Blog post.


Dumb Stuff to Avoid: Paying for Forecast Accuracy Is a Lot More Costly Than You Think
| Source: The Big Fat Finance Blog.

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Consider that the result of

Consider that the result of demand planning is only profitable to the extent that it is actionable – that is, if links above or below in the participant’s supply chain are unable to respond to the data, it might be a purely academic exercise.

The idea of diminishing

The idea of diminishing marginal returns is one which is easily understood as a concept, but too many forecasting and planning practitioners are anathema to their raison d’etre within an organization.