Forecasting Methods for Business to Business Success

Forecasting can be broken down into four major categories: qualitative, time series analysis, causal relationships, and simulation(Chase, Jacobs & Aquilano, 2005). Qualitative forecasting is subjective and uses estimates and opinions to predict. Simulation forecasting allows its users to modify different factors and conditions about a particular event or situation to arrive at the prediction of future conditions. Time series analysis uses historical data to predict future demands and trends. Causal forecasting works on the assumption that future results are usually signaled by a particular variable or indicator. Each type of forecasting has its place within the business world. In this paper we will discuss the Delphi, Leading Indicators and Grass-roots models of forecasting.

The Delphi Method is a qualitative method of forecasting that uses the anonymity of the participants to give the input of each participant equal weight in the forecasting process. In the Delphi method a questionnaire or survey is issued to all participants. The participants in the Delphi method are usually from different areas of company operation. Each participant then responds to the survey submits their responses anonymously. The results are then compiled and sent back to the participants for further review and revision. The process is repeated until a common forecast consensus is achieved ( Goldfisher, 2003).

The Delphi method requires great communication among members of a company and depending on the size of the company and the amount of revision to the information submitted at each stage of the Delphi method can be a time consuming process. Both the Delphi an Grass Roots method require a great deal of communication between different facets of an organization in order for them to be successfully implemented.