The practice of collaborative forecasting directly relates to product development and service offered given that Wal-Mart may view whether the demand is increasing through comparison of monthly sales with other retail companies. By means of comparing promotion volumes, Wal-Mart may add new services to increase customer satisfaction. A good example is the opening of Wal-Mart Moneycenters to broaden its menu of financial services and products.
Wal-Mart MoneyCenters will assist customers who are outside mainstream banking with convenient, nationwide access to low-cost money services, including check cashing, money orders, bill payment and money transfers. Wal-Mart is providing a foundation from which customers can achieve their financial goals. Benefits include safety, convenience and savings. Wal-Mart will continue to pilot and test many different products and services in an effort to provide the financial services customers need at various stages of their lives (Gunther, 1).
Although businesses and governments pay millions of dollars for forecasts, those forecasts are not always on target, particularly during turbulent economic times. Forecasters also examine certain external variables such as population, government spending, taxation, and monetary policy to calculate how each will influence future trends and developments. Economic environment and inflationary pressures would present challenges in getting accurate forecasting (Kress, 9).
The difficulties for an accurate forecasting include sudden changes in economy like fuel changes, inflation or economic downturn and disasters. One of the key problems in improving an accurate forecasting process is the inability to obtain a thorough, real-time view of forecast variations. Most forecasts are developed based upon static information and assumptions, and the usual differences between actual demand and forecast demand are often misinterpreted, resulting in attempts at fixing a non-existent problem.
This causes a chain reaction of events that cascade down through the company, often resulting in higher inventories, poor customer delivery performance, longer customer order lead times, and increased overhead costs due to excessive changes to production plans (Murphy, 1). To get hold of the highest quality forecast, a comprehensive knowledge of products and customers must be obtained. Based on the information utilized by Wal-Mart the most possible way to improve the current forecast is to make an investment in an information system program that gathers historical sales data and trends an not only by using collaborative forecasting.
Collaborative forecasting may somehow cause privacy issues to some retailers. In order to properly run the business, it is important to generate and maintain an accurate demand forecast, based on a combination of historic data, statistical modeling, and an in-depth knowledge of customers and products that they order (Grant, 1).
Bligh, Philip. “Taking the Frenzy out of Forecasting. ” Information Week March 2003: 1-2. Grant, Lorrie. “Wal-Mart sets sights on Target.
” USA Today 5 August 2005: A10. Gunther, Robert E. Profiting from Uncertainty: Strategies for Succeeding No Matter What the Future Brings. New York: Free Press, 2002. Kress, G. Forecasting Courses for Managers. In Understanding Business Forecasting 2 ed. , USA:Graceway Publishing Company, 1988. Murphy, Jean. “Planning With Partners: A Collaborative Solution. ” Supply Chain Brain 12 March 2001: 11. “Retail Industry Audit Technique Guide. ” Department of Treasury Internal Revenue Service 10 October 2005: 6.