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Forecasting Overview

Demand forecasting helps you predict future inventory needs and optimize replenishment decisions. This guide explains forecasting from a role-oriented perspective.

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Recommended Starting Points by Role

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Planner (Forecasting + Replenishment)

Start here:

1. Forecast Scenarios - Create and manage forecast scenarios
2. Forecast Events - Apply events (promotions, seasonality) to forecasts
3. Forecast Accuracy - Measure and improve forecast accuracy
4. Channel Projections - View forecasts by channel

Daily workflow:

• Create forecast scenarios for key products/channels
• Apply events (promotions, seasonality) to forecasts
• Generate and publish forecasts
• Monitor forecast accuracy
• Adjust forecasts based on accuracy insights

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Operations (Warehouse/Inventory)

Start here:

1. View Forecasts - View published forecasts
2. Forecast vs Actuals - Compare forecasts to actual demand
3. Deviation Alerts - Review forecast deviation alerts

Daily workflow:

• Review published forecasts for planning
• Compare forecasts to actual demand
• Review deviation alerts
• Provide feedback on forecast accuracy

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Finance (COGS, Holding Cost, Cost-to-Serve)

Start here:

1. Forecast Accuracy Metrics - Review MAPE, WAPE, bias metrics
2. Forecast Reports - Generate forecast vs actuals reports
3. Forecast Impact Analysis - Analyze forecast impact on costs

Daily workflow:

• Review forecast accuracy metrics
• Analyze forecast impact on inventory costs
• Generate forecast reports for analysis
• Monitor forecast bias trends

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Executive (Summary Dashboards)

Start here:

1. Forecast Dashboards - High-level forecast overview
2. Forecast KPIs - Key forecast performance indicators
3. Forecast Accuracy Summary - Overall accuracy metrics

Daily workflow:

• Review forecast dashboard summaries
• Monitor forecast accuracy trends
• Review forecast performance KPIs
• Analyze forecast impact on business

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Key Forecasting Concepts

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Forecast Scenarios

Forecast scenarios represent different forecast models with specific assumptions:

• Base Scenario: Standard forecast without events
• Promotion Scenario: Forecast with promotion events applied
• Seasonal Scenario: Forecast with seasonality adjustments
• What-If Scenarios: Explore different assumptions

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Forecast Events

Events represent demand influencers:

• Promotions: Sales, discounts, marketing campaigns
• Seasonality: Holiday seasons, back-to-school, etc.
• Marketing Campaigns: TV, digital, print campaigns
• External Factors: Weather, events, competition

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Channel Projections

Forecasts can be viewed by sales channel:

• DTC Channel: Direct-to-consumer forecasts
• Marketplace Channel: Amazon, eBay forecasts
• Retail Channel: Physical store forecasts
• Wholesale Channel: B2B forecasts

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Forecast Accuracy

Measure how well forecasts match actual demand:

• MAPE: Mean Absolute Percentage Error
• WAPE: Weighted Absolute Percentage Error
• Bias: Over-forecasting vs under-forecasting
• Hit Rate: Percentage within tolerance

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Forecasting Workflow

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Understanding Channel Policy Effects

Channel policies affect how forecasts are interpreted and used:

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ATP (Available to Promise) Policies

Channel policies define:

• Minimum Stock: Minimum inventory level for channel
• Safety Stock: Safety stock level for channel
• Reserve Stock: Reserve stock for commitments

Impact on Forecasts:

• Forecasts consider channel ATP policies
• Replenishment recommendations account for safety stock
• Channel allocations affect forecast fulfillment

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Replenishment Policies

Channel policies define:

• Reorder Point: When to reorder for channel
• Order Quantity: How much to order
• Lead Time: Expected lead time

Impact on Forecasts:

• Forecasts inform reorder point calculations
• Forecasts drive order quantity recommendations
• Lead times affect forecast horizon

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Alert Policies

Channel policies define:

• Low Stock Alert: Threshold for low stock alerts
• Stockout Alert: Threshold for stockout alerts
• Forecast Deviation Alert: Threshold for forecast deviation

Impact on Forecasts:

• Forecasts trigger alerts when deviation exceeds threshold
• Forecasts inform stockout risk calculations
• Forecasts drive proactive replenishment

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What Success Looks Like

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Planner Success

• ✅ Forecast accuracy (MAPE) below 20%
• ✅ Forecast bias near zero (balanced)
• ✅ Events properly applied to forecasts
• ✅ Forecasts published and used for planning
• ✅ Forecast accuracy improving over time

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Operations Success

• ✅ Forecasts used for inventory planning
• ✅ Forecast vs actuals tracked regularly
• ✅ Deviation alerts reviewed and acted upon
• ✅ Forecasts inform replenishment decisions

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Finance Success

• ✅ Forecast accuracy metrics tracked
• ✅ Forecast impact on costs analyzed
• ✅ Forecast reports generated regularly
• ✅ Forecast bias trends monitored

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Executive Success

• ✅ Forecast accuracy meets targets
• ✅ Forecasts drive business decisions
• ✅ Forecast performance visible in dashboards
• ✅ Forecast improvements demonstrated

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Common Pitfalls

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1. Not Applying Events

Problem: Creating forecasts without applying relevant events (promotions, seasonality). Solution: Always review and apply events:

• Check for upcoming promotions
• Apply seasonality adjustments
• Consider marketing campaigns
• Account for external factors

How to avoid: Make event review part of forecast creation workflow.

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2. Ignoring Forecast Accuracy

Problem: Creating forecasts but not measuring or improving accuracy. Solution: Regularly measure forecast accuracy:

• Review MAPE, WAPE, bias metrics
• Identify products/channels with poor accuracy
• Adjust forecast models based on accuracy
• Track accuracy improvements over time

How to avoid: Set up regular forecast accuracy reviews.

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3. Not Understanding Channel Policies

Problem: Creating forecasts without understanding how channel policies affect them. Solution: Understand channel policy effects:

• Review ATP policies
• Understand replenishment rules
• Consider alert thresholds
• Account for channel allocations

How to avoid: Familiarize yourself with channel policy configuration.

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4. Not Publishing Forecasts

Problem: Creating forecasts but not publishing them for use in planning. Solution: Always publish forecasts after creation:

• Review forecast details
• Verify events are applied
• Publish for use in planning
• Communicate forecast availability

How to avoid: Make publishing part of forecast workflow.

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Troubleshooting

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Forecast Not Generating

Symptoms: Forecast scenario created but forecast not generating. Possible causes:

1. Insufficient historical data
2. Forecast model configuration issue
3. Product/channel selection issue
4. System error

Steps to resolve:

1. Verify sufficient historical data exists
2. Check forecast model configuration
3. Verify product/channel selection
4. Review error messages
5. Retry forecast generation
6. Contact support if issue persists

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Forecast Accuracy Poor

Symptoms: Forecast accuracy (MAPE) consistently high. Possible causes:

1. Events not applied
2. Forecast model not appropriate
3. Insufficient historical data
4. External factors not accounted for

Steps to resolve:

1. Review and apply relevant events
2. Try different forecast models
3. Verify sufficient historical data
4. Account for external factors
5. Adjust forecast parameters
6. Monitor accuracy improvements

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Forecast Deviation Alerts Not Triggering

Symptoms: Forecasts deviate significantly but alerts not triggering. Possible causes:

1. Alert thresholds not configured
2. Alert policies not enabled
3. Deviation calculation issue
4. Alert delivery issue

Steps to resolve:

1. Check alert threshold configuration
2. Verify alert policies are enabled
3. Review deviation calculations
4. Check alert delivery settings
5. Test alert functionality

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Channel Projections Not Showing

Symptoms: Forecasts generated but channel projections not available. Possible causes:

1. Channels not selected in scenario
2. Channel policies not configured
3. Forecast not published
4. Permissions issue

Steps to resolve:

1. Verify channels selected in scenario
2. Check channel policy configuration
3. Verify forecast is published
4. Check user permissions
5. Review channel inventory views

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Related Pages

• Forecast Scenarios
• Forecast Events
• Forecast Accuracy
• Planning Recommendations
• Replenishment Planner

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Permissions & Roles