Still Need We Doing Forecast (?)
Spyros Makridakis, a Frenchman, who once had a unique idea. He held a competition to spend considerable effort and involves many people. As an expert in statistics, particularly in terms of forecasting, it is easy to guess that the degree of competition that he has something to do with forecasting. In short, this Mr. Makridakis interested in testing the efficacy of the forecasting methods that have been formulated and popularized by the statisticians, both the simplest and the already very complex. No half-hearted, more than 10 forecasting methods and a number of 1001 series included data taken from various parts of the world are used as testing materials and many experts forecasting of the Americas, Europe and Australia asked for assistance as a juror in the competition this long and melted.
Many interesting conclusions and implications for practitioners from the competition. What makes the manager a little "shock" with the first result is that sophisticated forecasting methods often do not produce better accuracy compared with the simplest method. Second, for business data or a very volatile economic and having no clear pattern, in qualitative forecasting often give better results than the quantitative forecast results.
In general, the implications of that competition also contributed to the utter death knell in quantitative forecasting methods. Managers increasingly realize that the sales data obtained from the market or the business has not followed the rules or patterns are clear. As a result, the weaker the ability of managers to do the extrapolation, although with the help of the most sophisticated methods. And this is also the beginning of the destruction of long-term planning is often sounded as important to be done by a company if you want to succeed. Let alone make a sales forecast for the next five years as usual in long-term planning, just to make a forecast one year alone, the manager has eroded confidence as to the accuracy of forecasts made.
Current market conditions, both for industrial products and consumer products are too complex. Too many factors of the business environment affecting the market, ranging from government regulation, technological changes, the impact of globalization and the increasingly high level of competition. Since the beginning of the 90s decade, it is so obvious that the changes that occur sometimes no longer incremental but also contains a surprising element.
Government regulations floater, making Indonesian managers often complain especially in terms of forecasting. Changes in import duties or changes in terms of exports and imports can change the map of competitive market conditions and changes within a month. Can imagine what happens when a government such as destroying all forms of protection in the automotive sector?
Then, was it necessary to do the forecasting manager? Making forecasts of course are still needed because of forecasts remains a part of strategic planning is vital, although the drafting process becomes more difficult and its accuracy is questionable.
The result of observation, with managers at several companies showed that manufacturing activity is part of forecasting is always important for managers, especially marketing manager. Marketing Managers in general still enjoy using the percentage of forecast sales to determine how much money must be spent for promotional activities. Therefore, the making of forecasts is the initial step of creating a marketing plan. Similarly, the accounting manager, still rely on in making their budget forecasts. Even for the sales, the performance of a branch head is sometimes measured by their ability to make forecasts and bonuses from the salesman often associated with the achievement of sales compared to forecast.
Accuracy of forecasts for several types of industries is very valuable. The ability to improve the accuracy of one percent of sales can increase or reduce inventory costs in large numbers. Imagine for example by companies such as United Tractors to market their brand of Komatsu heavy equipment. Each unit of heavy equipment may be worth more than one billion rupiah. Forecast is too small will hurt the company because the company failed to make delivery at a set time so that customers may decide to purchase another product. Similarly, the forecast is very excessive inventories will provide the cost burden is very large. Therefore, the caliber company United Tractors, making forecasting is considered as a serious job.
The conclusion of the arguments and examples above indicate that creating more and more difficult to forecast but the forecast remains to be done. Below, is beebrapa things that can be used by managers as inputs in the manufacture of forecasting.
First, managers should realize the level of complexity of a market. Know the customers well and learn all the variables that affect a forecast must be an important agenda for managers. The failure of the Ford "Edsel" that often made the wrong publication is forecast to calculate the potential of the market. Companies in Detroit blame because they did not conduct a survey to determine consumer preferences, but they launched the car in accordance with what they want. Know the customers, competitors and business environment well is a good step in making a forecast. Marketing surveys should be performed routinely.
Second, managers wrestle for products that are very sensitive to changes in business environment, forecasting methods quantitative methods should be aware of. Precisely in this case, qualitative forecasting and the use of intuition of the manager in question no doubt is the way that can not be avoided anymore. To sharpen the intuition of managers, Ansoff remind managers to become more sensitive to what he calls a weak signal, which is an early symptom of a change. Only managers who listened to the voice of the consumer and have good communications with their subordinate departments or who can train their sensibilities.
Third, the sensitivity of a manager can be enhanced by improving the company's information systems. The method is called "environmental scanning system" already widely used in the large companies in the U.S. for the purpose of making forecasts. In essence, environmental scanning consists of stages such as identifying the factors that affect the business, how much each factor affect the business, make a diagram showing the critical factors and finally is making a "database environment".
Environmental scanning process in this system will memakasa managers to become more sensitive to changes in business environment at an early stage. This clearly would provide benefits to companies primarily in anticipation of a very sudden change. Perhaps a good accuracy may not be achieved with the existence of environmental scanning system, but at least, the direction of the changing business environment can be predicted more accurately.
Fourth, in making any forecasts, managers need to consider the usage scenario. The scenario is a word that has often spoken every day. Only, few managers are formally made as part of strategic planning. In these scenarios, managers realized that the capabilities are very limited in making forecasts. Therefore, making the scenario shows that instead of allocating too much time to make an accurate forecast which is basically very difficult, managers are more interested to see the implications.
Many interesting conclusions and implications for practitioners from the competition. What makes the manager a little "shock" with the first result is that sophisticated forecasting methods often do not produce better accuracy compared with the simplest method. Second, for business data or a very volatile economic and having no clear pattern, in qualitative forecasting often give better results than the quantitative forecast results.
In general, the implications of that competition also contributed to the utter death knell in quantitative forecasting methods. Managers increasingly realize that the sales data obtained from the market or the business has not followed the rules or patterns are clear. As a result, the weaker the ability of managers to do the extrapolation, although with the help of the most sophisticated methods. And this is also the beginning of the destruction of long-term planning is often sounded as important to be done by a company if you want to succeed. Let alone make a sales forecast for the next five years as usual in long-term planning, just to make a forecast one year alone, the manager has eroded confidence as to the accuracy of forecasts made.
Current market conditions, both for industrial products and consumer products are too complex. Too many factors of the business environment affecting the market, ranging from government regulation, technological changes, the impact of globalization and the increasingly high level of competition. Since the beginning of the 90s decade, it is so obvious that the changes that occur sometimes no longer incremental but also contains a surprising element.
Government regulations floater, making Indonesian managers often complain especially in terms of forecasting. Changes in import duties or changes in terms of exports and imports can change the map of competitive market conditions and changes within a month. Can imagine what happens when a government such as destroying all forms of protection in the automotive sector?
Then, was it necessary to do the forecasting manager? Making forecasts of course are still needed because of forecasts remains a part of strategic planning is vital, although the drafting process becomes more difficult and its accuracy is questionable.
The result of observation, with managers at several companies showed that manufacturing activity is part of forecasting is always important for managers, especially marketing manager. Marketing Managers in general still enjoy using the percentage of forecast sales to determine how much money must be spent for promotional activities. Therefore, the making of forecasts is the initial step of creating a marketing plan. Similarly, the accounting manager, still rely on in making their budget forecasts. Even for the sales, the performance of a branch head is sometimes measured by their ability to make forecasts and bonuses from the salesman often associated with the achievement of sales compared to forecast.
Accuracy of forecasts for several types of industries is very valuable. The ability to improve the accuracy of one percent of sales can increase or reduce inventory costs in large numbers. Imagine for example by companies such as United Tractors to market their brand of Komatsu heavy equipment. Each unit of heavy equipment may be worth more than one billion rupiah. Forecast is too small will hurt the company because the company failed to make delivery at a set time so that customers may decide to purchase another product. Similarly, the forecast is very excessive inventories will provide the cost burden is very large. Therefore, the caliber company United Tractors, making forecasting is considered as a serious job.
The conclusion of the arguments and examples above indicate that creating more and more difficult to forecast but the forecast remains to be done. Below, is beebrapa things that can be used by managers as inputs in the manufacture of forecasting.
First, managers should realize the level of complexity of a market. Know the customers well and learn all the variables that affect a forecast must be an important agenda for managers. The failure of the Ford "Edsel" that often made the wrong publication is forecast to calculate the potential of the market. Companies in Detroit blame because they did not conduct a survey to determine consumer preferences, but they launched the car in accordance with what they want. Know the customers, competitors and business environment well is a good step in making a forecast. Marketing surveys should be performed routinely.
Second, managers wrestle for products that are very sensitive to changes in business environment, forecasting methods quantitative methods should be aware of. Precisely in this case, qualitative forecasting and the use of intuition of the manager in question no doubt is the way that can not be avoided anymore. To sharpen the intuition of managers, Ansoff remind managers to become more sensitive to what he calls a weak signal, which is an early symptom of a change. Only managers who listened to the voice of the consumer and have good communications with their subordinate departments or who can train their sensibilities.
Third, the sensitivity of a manager can be enhanced by improving the company's information systems. The method is called "environmental scanning system" already widely used in the large companies in the U.S. for the purpose of making forecasts. In essence, environmental scanning consists of stages such as identifying the factors that affect the business, how much each factor affect the business, make a diagram showing the critical factors and finally is making a "database environment".
Environmental scanning process in this system will memakasa managers to become more sensitive to changes in business environment at an early stage. This clearly would provide benefits to companies primarily in anticipation of a very sudden change. Perhaps a good accuracy may not be achieved with the existence of environmental scanning system, but at least, the direction of the changing business environment can be predicted more accurately.
Fourth, in making any forecasts, managers need to consider the usage scenario. The scenario is a word that has often spoken every day. Only, few managers are formally made as part of strategic planning. In these scenarios, managers realized that the capabilities are very limited in making forecasts. Therefore, making the scenario shows that instead of allocating too much time to make an accurate forecast which is basically very difficult, managers are more interested to see the implications.
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