How to improve demand forecasts for new product families
Summary
Editor’s note: The following article is a joint project of professors in the University of Tennessee Knoxville’s Global Supply Chain Institute. A major reason for this was SKU-level spread bias, which refers to the judgmental error planners make when allocating family-level demand to individual SKUs. This type of forecast error is particularly harmful in new product family launches because it distorts inventory and logistics planning, leading to higher costs and missed sales opportunities. This is the last research project that we worked on with the late Mary Holcomb, who had a huge influence on our team and many others.” The road to accurate planning for new product families is not easy to follow, but there are ways to mitigate the inaccuracies that can have an impact on the bottom line. By implementing the managerial strategies outlined above, firms can enhance their forecasting accuracy, reduce stockouts and excess inventory, and improve overall supply chain performance.