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Improving Financial Forecast Accuracy With Less Effort

The Opportunity

  • A retailer’s quarterly financial forecasting process would take 28 people, 160 hours to complete, and a total of 4 weeks in duration.  Financial forecasts were also tied to demand planning, merchandising, and store operations consensus planning, so improvements in this process, including accuracy gains, would be very impactful.

Our Approach

  • We deployed hierarchical, best-fit methodology time series forecasting models to produce forecasts for all product groups and locations.  We taught the planning and IT teams how to maintain and expand the system.

The Impact

The system produces 1.2 million forecasts by product group and store.  Forecast management is by exception, so planners need to only look at a smaller set of product/stores that may need attention.

Benefits:

  • Gain in accuracy of 12%.
  • Planning process reduction from four weeks to one week.
  • 480 hours of staff time saved annually.
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