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Accuracy target

As explained in Demand Forecasting Best Practices

A predefined level of forecast accuracy established as a performance objective.

An accuracy target is a predefined forecast-accuracy level used to focus improvement, but it should reflect achievable performance and business value. section 12.2.3

Set and use accuracy targets carefully:

  • Base targets on forecasting benchmarks rather than arbitrary expectations. section 12.2.3
  • Account for external conditions that affect performance and lie outside the team’s control. section 12.2.3
  • Use metrics to discuss and improve performance, not to reward or punish people. section 12.2.3
  • Check whether measurement choices encourage metric hacking, such as selecting a convenient lag or irrelevant aggregation level. section 12.2.3

A target under changing conditions

Expecting the same forecast accuracy in 2020 as in 2019 would ignore Covid-related external effects; a deterioration does not automatically justify blaming planners. section 12.2.3

How Demand Forecasting Best Practices covers it

How deep it goes
Explains target-setting principles, metric gaming, incentives, benchmarks, and external factors without specifying a calculation method.
Examples
Uses Covid-era comparisons and metric-hacking examples involving forecast lags and aggregation levels.
What it assumes
Assumes familiarity with forecast-accuracy metrics and KPIs while emphasizing benchmarks as the basis for achievable targets.
What you can do after
Evaluate and configure accuracy objectives without rewarding metric manipulation or assigning blame for external conditions.
How it connects
Connects accuracy targets with forecasting benchmarks, forecast accuracy, KPIs, incentives, and forecast aggregation.
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Related concepts

This explainer was generated by Manning's knowledge graph from the text of Demand Forecasting Best Practices. The section links point to the parts of the book it draws on.