The following is inspired from an older blog post from CEO Nikhil Kinikar.

Across the country, there are thousands of store managers who need to calculate the number of shifts needed to staff their stores. Typically, how they calculate their labor demand is based off their projected sales forecast for the week. It’s often assumed that the greater accuracy a forecast has, the better the result for a retailer. But how valuable is a “perfect” sales forecast?

Let’s think about this in practice. If a forecasting module operates at an average of 95 percent accuracy, it means that a sales forecast of $100,000 in a week could be expected to delivery anywhere between $95,000 and $105,000. These numbers affect how a store manager will generate labor demand. Fine tuning a product for greater forecasting accuracy typically involves adding even more metrics to handle within a labor management system, sometimes creating a greater demand than what store managers will have available for them.

All enterprises have separate sales forecasting software meant purely for developing sales targets, not necessarily planning for labor. In an ideal world, both the sales and labor planning departments of an organization should work in harmony, but a forecasting component inside a workforce scheduling software still remains in a conflicted position: where it has to somehow balance accuracy expectations from forecasting with a great volume of work for labor, which carries its own different variables for effective management.

Is an accurate sales forecast helpful? Absolutely. But getting bogged down in accuracy can often be reductive. At worst, it’s the equivalent of adding more gears, applications and functions to a phone originally just meant to call people.

Taking all of these notes into account, consider the following when building your forecast:

1. The need for forecasting accuracy is ultimately presumptuous. No matter how accurate your forecast is, the labor standards that drive the necessary demand forecast are often going to negate how accurately you predict sales.

2. Be aware of sales per labor hour. Activies like cashiering in a grocery store or running a pharmacy are completely different and therefore reflective of how an investment into accuracy of sales forecast should be directly proportional to how much sale each labor hour drives.

3. Greater forecasting accuracy demands microscopic tuning of existing scheduling software and more investment from store managers, whose time is better spent on store floors, selling to customers.

4. If you do decide to aim for greater accuracy, set hopeful, but realistic expectations to make it great over the course of several years – not on the first day.

Like anything else in retail, a strong forecast is a journey. Rather than getting lost in the idea of creating a perfect sales forecast to generate strong workforce schedules, your goal should be to create forecasts that are as actionable for your labor as possible and as customizable as they need to be, ensuring that your store managers have just what they need to do their job.

That way, they and their teams can focus on what they do best: selling!

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