What Are Qualitative Forecasting Methods in Business Operations?

Summary

The video script discusses various qualitative forecasting methods used to predict future demand. It highlights two types: extrinsic and intrinsic methods. Extrinsic methods involve gathering non-numerical data from outside the organization, such as customer surveys and industry expert opinions (e.g., the Delphi method). Intrinsic methods focus on collecting insights from within the organization, including opinions from employees like junior data analysts and customer service reps. The script emphasizes the importance of gathering, discussing, and condensing these opinions to create a more accurate forecast, although it acknowledges the challenges in achieving precise results.

Takeaways

• 😀 Qualitative methods focus on non-numerical data, such as opinions and observations.
• 😀 An example of an extrinsic qualitative method is a market survey, which gathers non-numerical data from customers or potential customers.
• 😀 Market surveys can help predict future demand based on customer expectations for products or services.
• 😀 Comparing results from multiple years of surveys can provide a clearer picture of future demand trends.
• 😀 Another extrinsic qualitative method is the Delphi method, where industry experts provide opinions separately to avoid bias.
• 😀 The Delphi method helps in understanding future market trends without requiring experts to meet in person.
• 😀 An intrinsic qualitative method involves gathering opinions from people within the organization, including not just senior managers but also junior staff.
• 😀 Input from various internal employees, like data analysts or customer service reps, can provide valuable insights on future demand.
• 😀 The Delphi method and gathering internal opinions should involve separate collection of ideas before a final group meeting to condense and refine them.
• 😀 While these qualitative methods aren't perfect, gathering diverse opinions and challenging them can lead to valuable insights and a more informed forecast.

Q & A

What are qualitative methods in forecasting?

Qualitative methods are non-numerical methods used for forecasting, often relying on opinions and insights rather than hard data.

Can you give an example of a qualitative extrinsic method?

An example of a qualitative extrinsic method is a market survey, where you gather non-numerical data from outside your organization, like asking customers or potential customers about their purchasing expectations.

Why is it beneficial to have a survey conducted over many years?

Having a survey conducted over many years is beneficial because it allows you to compare results and observe patterns, which can help refine future demand predictions.

What is the Delphi method, and how does it work?

The Delphi method is a structured process where industry experts provide their opinions separately, and their answers are aggregated to form a collective forecast. This method avoids groupthink by keeping experts' opinions independent.

Who are the experts in the Delphi method, and what do they contribute?

Industry experts, who may not be familiar with your business's exact products or strategies, contribute by offering their broad knowledge of the market, which can help predict future trends.

What is an example of an intrinsic qualitative forecasting method?

An intrinsic qualitative method involves gathering opinions from within the organization, such as from junior analysts or customer service representatives, to gain insight into future demand.

Why is it important to seek opinions from different levels within the organization?

Seeking opinions from different levels, such as junior analysts and customer service reps, helps gather a wide range of perspectives, which can provide a more comprehensive view of potential future demand.

How does the process of collecting internal opinions work?

The opinions are first gathered separately, similar to the Delphi method, and later, a meeting is held to discuss, challenge, and refine these opinions, along with other collected data.

Can you expect an accurate forecast just by spending more time in meetings?

No, spending more time in meetings does not guarantee an accurate forecast. The process requires quality opinions and thoughtful discussions, but it is not an exact science.

What is the ultimate goal of using qualitative forecasting methods?

The ultimate goal is to gather valuable insights and opinions from both internal and external sources to build a more informed and well-rounded forecast for future demand.