The forecast will be wrong. Plan for how wrong.

Every planner has heard it: the forecast is always wrong. It is usually said as a joke, but it carries a serious instruction. If a single number is guaranteed to miss, the useful question is not “what will we sell?” but “how far off are we likely to be, and in which direction?”

Two measurements answer that. The first is the size of the error. Mean absolute deviation, or a percentage version of it, tells you how much the forecast typically misses by. That figure, not the forecast itself, should drive safety stock. A product with steady demand and a small error needs little buffer; a volatile product with the same average demand needs much more. Treating them alike either ties up cash or disappoints customers.

The second is bias. An error that swings above and below the actual is noise. An error that leans one way week after week is a signal that something in the process is broken: a sales team padding numbers to protect supply, a promotion nobody shared, a trend the model has not caught. A tracking signal, the running sum of errors divided by the average absolute error, flags this drift long before it shows up as a warehouse full of the wrong stock.

Neither measure requires sophisticated software. A spreadsheet that records forecast and actual each period is enough to start. What matters is the habit: review error and bias at every planning meeting, and ask what changed when either moves.

There is also a cultural shift involved. When the forecast is judged by whether it was “right”, people defend their numbers. When it is judged by whether its error is understood and shrinking, they start improving the process. That is the difference between a forecast that is a guess and one that is a managed input to the plan.

The forecast will be wrong. Good planning starts by measuring exactly how wrong, and making that part of every plan review.