2011 Forecasting Performance Benchmark Study
Demand Planning for New Product Introductions
New products account for one fifth of the volume in 2010 and remain hard to forecast. The average weekly Demand Planning forecast error for new products is 50% greater than existing products, with an error of 65% compared to 46% for existing items.
Bias for new products averages 10%, more than twice that of existing products. It comes as no surprise that industry is overly optimistic about product introductions, given the importance placed on the successful launch of new items and line extensions.
Understandably, error is exceptionally high when a product is first launched and then drops as products age, taking about a year to reach a level of accuracy similar to existing products. It is interesting to note that companies with the lowest error during promotions also tend to have a better bias.
