Increasing sales forecast accuracy with technique adoption in the forecasting process

Abstract: Abstract   Purpose - The purpose with this thesis is to investigate how to increase sales forecast accuracy.   Methodology – To fulfil the purpose a case study was conducted. To collect data from the case study the authors performed interviews and gathered documents. The empirical data was then analysed and compared with the theoretical framework.   Result – The result shows that inaccuracies in forecasts are not necessarily because of the forecasting technique but can be a result from an unorganized forecasting process and having an inefficient information flow. The result further shows that it is not only important to review the information flow within the company but in the supply chain as whole to improve a forecast’s accuracy. The result also shows that time series can generate more accurate sales forecasts compared to only using qualitative techniques. It is, however, necessary to use a qualitative technique when creating time series. Time series only take time and sales history into account when forecasting, expertise regarding consumer behaviour, promotion activity, and so on, is therefore needed. It is also crucial to use qualitative techniques when selecting time series technique to achieve higher sales forecast accuracy. Personal expertise and experience are needed to identify if there is enough sales history, how much the sales are fluctuating, and if there will be any seasonality in the forecast. If companies gain knowledge about the benefits from each technique the combination can improve the forecasting process and increase the accuracy of the sales forecast.   Conclusions – This thesis, with support from a case study, shows how time series and qualitative techniques can be combined to achieve higher accuracy. Companies that want to achieve higher accuracy need to know how the different techniques work and what is needed to take into account when creating a sales forecast. It is also important to have knowledge about the benefits of a well-designed forecasting process, and to do that, improving the information flow both within the company and the supply chain is a necessity.      Research limitations – Because there are several different techniques to apply when creating a sales forecast, the authors could have involved more techniques in the investigation. The thesis work could also have used multiple case study objects to increase the external validity of the thesis.