How Often Should You Forecast: Daily, Monthly or Quarterly? Finding the Right Cadence for Your Business

No one can predict the future with 100% accuracy, but that doesn’t mean you shouldn’t try anyway. Much of business success is built on having a good idea of what lies ahead. This includes everything from projecting your financials for the upcoming fiscal year all the way down to how the weather might affect your shipments over the next 24 hours. Forecasting takes on many different forms, and it’s crucial for your business to make the most of it so you can have a reasonable expectation for what the future holds for you.

Smart forecasting is essential for determining which markets you want to enter, how you’ll manage your inventory, where you should be investing your profits and more. But every moment you take your eyes off the road to check the map is time spent not dealing with the here and now, which is why you need to determine the proper cadence for your time series forecasting activities. Focusing too much on areas that don’t need more than a periodic check-in can hurt your efficiency. Neglecting to look at other areas that are more urgent can hurt your accuracy and lead to improper resource allocation and other issues. In short, you need to determine when you need a forecast daily, monthly, quarterly or annually. Finding the right rhythm means you’ll be able to keep your focus on what’s important while also being prepared for what’s coming up next.

Daily Forecasting: Benefits, Challenges and Use Cases

Daily forecasting applies to more than just weather reports. Beyond knowing whether there’s a storm expected that could disrupt your supply chain, daily forecasts can be useful for understanding the behavior of the stock market and order volume on e-commerce sites. It’s important to check in on these metrics on a daily basis because conditions can change so rapidly and those changes can influence your decision-making on a day-to-day basis.

On the other hand, it’s important not to devote too much attention to daily forecasting. If you add too many items to your daily forecast checklist, you could put yourself in a bad position. For instance, you may be spending too much time on data analysis that you simply don’t need at the moment. There’s also the matter of how many resources you need to allocate for your forecasting and how an overabundance of daily forecasts could take attention away from more-pressing matters. Finally, there’s always the risk that you might overreact to a short-term fluctuation that will smooth itself out in another day or two.

Weekly and Monthly Forecasting: Finding the Right Balance

Although they don’t offer immediate details the way daily forecasting does, weekly and monthly forecasting schedules nevertheless provide good resources for your business. In fact, by offering a good balance between the granularity of daily forecasting and the efficiency that comes with checking on a less-frequent basis, these forecasting models fall into the sweet spot for many businesses.

Weekly forecasting is better suited for just-in-time inventory and short-shelf-life products. If you work in a highly dynamic industry where market conditions are known to fluctuate regularly, a weekly forecast can provide you with enough time series data and time to react accordingly without being left behind by your competitors. It’s also generally recommended that cash flow be projected on a weekly basis to spot any potential issues before they have an opportunity to disrupt your operations.

When it comes to identifying seasonal trends, monthly forecasting is more than likely to be your best bet. This is best for metrics that don’t experience sudden shifts or don’t require immediate reaction. Monitoring sales and other metrics month-by-month gives you a snapshot of where certain numbers are trending without needing to devote time and energy to analysis every day or every week.

Quarterly and Long-Term Forecasting: Strategic Planning and Risk Management

In regard to long-term planning, many businesses choose quarterly or annual forecasting to provide them with a view of what lies ahead for them in a general sense. Quarterly forecasts are most frequently used for financial planning in relatively stable industries, because it enables companies to make short-term decisions while keeping an eye on the long-term. Yearly forecasts are crucial resources for business leaders to create their annual budgets and tend to be most useful in industries where change occurs at a much slower pace.  

Many companies find it useful to supplement their long-term forecasting activities with more frequent check-ins just to take the market’s temperature or confirm that the numbers are still trending in the anticipated direction. This helps them save resources while also maintaining a certain level of responsiveness to changing conditions.  

Industry-Specific Forecasting Across Different Sectors

Obviously, the cadence of your forecasting activities will depend a lot on the demands of your particular industry. Being able to keep pace with your competition means staying on top of the right numbers at the right times, as well as being smart about how you allocate your resources.

For example, retailers have to contend with a lot of demand fluctuations that impact their orders and merchandising efforts. This means they have to keep a close eye on weekly and monthly sales forecasts to ensure they have the most appropriate inventory levels. In the finance sector, demands are even higher, with markets changing from day-to-day and even hour-to-hour. This means firms need to conduct daily forecasting in many respects to ensure they have as much information as possible to avoid investment risks. Manufacturing companies, on the other hand, can take a longer-term perspective. They perform rolling forecasts to help them synchronize their inventories to production levels and consumer demand forecasting.

Determine the Perfect Cadence for Your Forecasting With ketteQ

The right cadence for your forecasting frequency can make a world of difference, providing you with all the intelligence your business needs without being a burden on your operations. With ketteQ’s powerful supply chain planning solution providing automation in forecasting, your business can gain the tools you need to refine your forecasting approach to ensure your long-term success.

Built with the latest artificial intelligence and machine learning technologies, ketteQ’s software solution features the innovative PolymatiQ™ solver tool. This enables you to automatically simulate thousands of scenarios at the same time, providing you with actionable insights based on the real data you depend on to make the most informed decisions. We make it possible for you to be prepared for virtually any eventuality no matter how often you need to look into the future.

If you are ready to learn more about ketteQ’s robust AI-driven forecasting platform and what it can do to help your business prepare for what lies ahead, reach out and talk to a member of our team today. We’re ready to answer any and all questions you may have.