How Collaborative Forecasting Streamlines Project Planning

When you need to predict demand for your goods or services, set a budget, or plan a major project, you’ll use the data you have on hand to create a forecast. But if you’re only working with a limited set of data, your predictions are unlikely to come true.

For accurate forecasts, you need to involve every department in your organization, as well as external partners and customers. When you work with them to collect and analyze data and make predictions, that’s collaborative forecasting.

In this post, we’ll explore the concept and its benefits for project planning—and how the right technology can streamline the collaborative forecasting process.

What is collaborative forecasting and what are the benefits?

Collaborative forecasting is the process of making predictions based on data and insights from multiple stakeholders and partners. Teams from across an organization work in conjunction with suppliers and customers, sharing their diverse knowledge and expertise.

Instead of relying solely on historical data, collaborative forecasting incorporates real-time information for more accurate predictions and faster responses to changes. It also involves a continuous feedback loop for ongoing learning and improvement.

Collaborative forecasting is often used in manufacturing and supply chain management, but it brings a number of benefits for businesses generally and for project planning in particular.

Improved accuracy and reliability

With collaborative forecasting, all participants provide data and feedback from their own areas of operation, be it sales, accounting, or manufacturing. You can then factor all relevant information into your predictions—from consumer behavior to production capacity.

This vastly improves the accuracy and reliability of the models and scenarios used in the forecasting process. For example, when retailers can rely on a demand forecast, they won’t order too much or too little stock from suppliers.

According to a Deloitte report, organizations with high levels of participation across business functions enjoy greater forecast accuracy, with 77 percent keeping forecast revenue variances to less than 10 percent (compared to only 59 percent of those with lower participation levels).

For project planning, accurate predictions help you to set realistic budgets and timelines and allocate resources accordingly. By combining the skills and perspectives of all stakeholders, you’re making sure that no idea, opportunity, or risk is overlooked.

Better flexibility and adaptability

Because collaborative forecasts use real-time information as well as historical data, they enable you to respond quickly to changes and build flexibility into your project planning. Combining data from various stakeholders gives you greater visibility into strengths and weaknesses.

With input from a wide range of sources, there are also more people to watch out for changes, problems, and opportunities—and to provide feedback and suggestions on how to react. By involving customers and suppliers in the process, you can anticipate and meet their evolving needs and preferences.

You can easily compare forecasts with actual results, see how they’re affecting the project’s success, and work together to make adjustments where needed. This can be invaluable in industries where scope creep is common, such as construction or tech. By collecting data from time-tracking software, project management platforms, and financial tools, teams are able to learn and improve not only the forecasting process but also the outcome of their projects.

Enhanced communication and trust

Collaborating with others encourages a culture of open communication and transparency. Including all stakeholders in the forecasting process increases buy-in and commitment as well as accountability. Involving employees makes them feel valued, boosting motivation and productivity.

The idea is that everyone has a common understanding of the project’s objectives and priorities. Stakeholders have the chance to share their ideas, expectations, and concerns, which builds trust among partners and makes it easier to resolve any disagreements.

Collaborative forecasting is particularly suited to an NGO setting, where transparency and collaboration are crucial. It’s an approach that can enhance stewardship and build trust across multiple stakeholders, particularly when paired with the right nonprofit accounting and management software that provides the reporting and planning tools you need.

Step-by-step guide to implementing collaborative forecasting

Collaborative forecasting needs a clear and consistent framework since you’re working with multiple entities.

Step 1: Set clear objectives and metrics

The first step is to define the objectives of your collaborative forecasting process and make them clear to everyone involved.

These goals should be aligned with the wider objectives of your organization and tied to the specific project for which you’re running the forecasts. It’s also important to factor in the various goals and challenges that apply to each internal team and business partner.

You’ll need to determine which metrics to measure and what represents success. For example, you might measure productivity gains, sales growth, and customer satisfaction alongside forecast accuracy and bias, as well as factoring in how the forecasts affected project outcomes.

Now, you can create a roadmap that outlines all of the above, plus deliverables, timelines, and the roles and responsibilities of the forecasting team.

Step 2: Assemble the right team

Collaborative forecasting requires a high level of trust among the stakeholders, so it’s vital that you get the balance right within your team. As well as strong leadership to coordinate multiple entities, you need participants with a willingness to share information and feedback.

Team members also need to be good communicators with strong listening skills and the ability to accommodate different perspectives and points of view. It’s useful if there’s someone in the team with experience presenting forecasts to diverse groups in a comprehensible way.

Once the team is assembled, you need to keep them motivated—collaborative forecasting requires a high level of engagement. Make sure you’re gathering input and feedback at every stage of the process through regular meetings (in-person or online) and surveys. Recognize and reward their contributions.

Step 3: Utilize appropriate tools and platforms

Software tools and platforms can make your collaborative forecasting process much more efficient and help you produce reliable predictions. For example, a unified communications solution lets you keep all relevant conversations in one place and facilitates collaboration by making it easy to share and access data.

Visual management tools like Kanban Zone can help improve your team’s collaborative forecasting by making all communications and progress tracking easily accessible to everyone. Plus, Kanban Zone is equipped with advanced Kanban metrics that can make it easier to track project progress and gather productivity data that can then be used to predict the amount of time and resources necessary to complete projects.

Technology also boosts general efficiency, with automation for repetitive tasks such as data entry and reporting. You can collect and validate data from multiple sources, present forecasts visually with charts and dashboards, and use advanced analytics to identify patterns and trends.

It’s important to use tools that suit your particular industry. For example, manufacturing companies would benefit from using ERP and MRP software to provide them with an accurate, single source of data. Alternatively, fintech providers will want to use financial services software with a multi-dimensional ledger and customizable reporting to capture business context.

Speaking of integration, it’s a good idea to sync your forecasting tools with business systems such as accounting, budgeting, and inventory software. This will make it easier to collate the data, saving time and streamlining workflows.

Step 4: Regularly updating forecasts

Collaborative forecasting is an iterative process, and you’ll need to build in some flexibility so that you can adjust the forecasts based on internal and external conditions. These could include market dynamics, the economic climate, supply chain disruptions, consumer feedback, and your own resources.

For example, as the graph below shows, focusing on the underlying drivers of revenue and cost creates more reliable forecasts.

By using scenario planning and modeling multiple forecasts, you’ll be better prepared for changes. For example, you could use data from your CRM system to predict customer responses to a new product—both positive and negative—and how you’d react in each case.

You’ll need to monitor not only the accuracy of the forecasts themselves but also the success of your forecasting processes. Compare predictions with actual outcomes, and see how they relate to your previous forecasts. If there’s a mismatch, investigate how you got it wrong.

A continuous feedback loop among stakeholders will help you to improve your forecasts and plan your projects better.

 Common challenges in collaborative forecasting and solutions

Although collaborative forecasting brings many benefits, there are some common challenges to be aware of.

Time and effort

Collaborative forecasting can be complex and time-consuming. After all, it requires you to coordinate multiple stakeholders across and beyond your organization, continuously collecting and analyzing the data and feedback they provide.

Plus, you’ll need to factor in time to adjust the forecasts for changing circumstances. It can all affect the amount of time you have to spend on project planning and execution. The good news is that you can streamline your forecasting processes with technology.

Data quality and security

Another major challenge is making sure that the data used in your forecasts is high-quality. It must also be standardized, otherwise your predictions won’t be accurate.

This becomes more difficult if there are silos among stakeholders and if your data isn’t well-organized. Using a single platform to integrate data from multiple sources will help to avoid gaps, duplications, and errors.

It’s also vital that the data you collect is fully secured and that you remain compliant with regulations on data privacy—especially when sharing information with people outside of your organization.

Conflicts among stakeholders

Collaborative forecasting is a delicate process because you have to accommodate the interests, needs, and expectations of all stakeholders. Within any large group of people, there will be differences of opinion on how to proceed and how to use the available resources.

Preferences, priorities, and ways of measuring success will also differ across stakeholders. You’ll have to navigate any problems that arise from conflicting demands and potentially agree to trade-offs and compromises.

Final thoughts

Collaborative forecasting presents a few challenges, but it’s well worth a little time and effort (which is significantly reduced with the help of modern technology).

By working with all stakeholders, you’ll be able to produce accurate predictions and use them for budgeting, staffing, inventory management, meeting customer needs, and creating project plans with confidence.

You’ll also be able to break down silos, enhance communication and trust, and maintain strong relationships both within the business and with external partners.