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Twelve Forecasting myths – study case chocolate factory

June 1, 2020 — Had you ever wondered how to do business forecast or something simpler like weather forecast? Forecasting may be a difficult responsibility for a manager and business owner. Here we wish to share with you the twelve frequent mistake (called myths) and twelve methods (how to) proper forecast.

About forecasting

Forecasting is the first step before decision and decision happens each day.

You ask yourself :

  • daily: should I leave home with or without an umbrella?
  • if you have a cloth factory:  should I produce red or blue clothes?
  • if you wish to expand your business: should I trust the new client or not ? … and many others

Some sources say that every day we make over 35,000 decisions assuming the future.

How to forecast?

We have on hand and we may discover partially: the weather forecasting, the trend for the new year, the clients history … and yet it feels like we flip a coin when it comes to preparing for the future. What’s it going to be … head or tail?! The chances are fifty fifty, that’s why we call it luck or intuition.

Not only children believe in myths and chances, but every day in business we use them to choose our next action. I invite you to discover the most common 12 myths that we use in forecasting and which is the alternative action, in the light of a case study at a chocolate factory.

The chocolate factory is a fictional company, founded more than 100 years ago. It is a family factory  based on the collaboration between  workers and suppliers who have had a long partnership. Their products are very appreciated by each generation and their recipes are secreted. Even if their products are very appreciated  the factory does not always succeed to produce the proper quantity of chocolate to satisfy all customers but also the budget.

How to watch the movie?

Each slide in the movie has 3 parts:

  • part 1.  It is describing the situation and lets you think how you would  forecast
  • part 2. It is giving you a clear view of the forecasting problem and it challenges you to find the reason.
  • part 3. It is showing you the answer to the question from part 2.

Hints:

  • the 12 situations are related and represent an evolution of the factory in forecasting,
  • stop the video each time you need to read all the text,
  • go back any time you need,
  • watch the video like a storytelling with lessons learned.
After watching the movie

Now that you had watch the forecasting movie, which of the 12 myths had got you thinking and which is you next step in practical forecasting in your company?

Inspire people to do better forecast

Forecast is like chocolate, once you tasted you can not stop doing it!