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Is 100% forecast accuracy a panacea for Supply Chain?
Many Supply Chain professionals believe that achieving 100% forecast accuracy is like the holy grail. If they achieve it, they can overcome the perils of stockouts and surplus inventory.
Is it true?
You can check it out. Go back in the history when some product-geography combination got to 100% or close to 100% forecast accuracy. Did you get zero stockouts? Empirical evidence suggests that stockouts don’t reduce if you achieve 100% forecast accuracy. On the contrary, if you are measuring sales forecast accuracy, you probably had much higher level of stockouts… Sales turned out to be equal to forecast because that’s all that was available to sell!
If you want the supply chain to be effective, move out of the fixation on forecast accuracy. It’s good to deviate from forecast if the actual demand is different, isn’t it?