Benefits and challenges of business forecasting

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At a glance

  • The data democratization enabled by forecasting platforms brings a proactivity to strategic decision-making that fosters a secure and empowered organizational culture. This strengthens leadership and enhances employee morale.   
  • Accurate forecasts drive operational efficiencies shown to significantly enhance financial outcomes — for example, delivering US$1.1M in incremental profits through optimized price and portfolio management in one study of gfknewron Predict.
  • Despite its benefits, forecasting has limitations, such as its dependence on historical data, which can delay business agility. There’s also a risk of overreliance on these tools, potentially causing organizations to stray from their core strengths and vision. However, these challenges can be countered with the help of AI-enhanced platforms positioned as companions to decision making.

What companies stand to gain from accurate forecasting

Business forecasting delivers a mix of increasingly critical benefits. Qualitatively, the certainty afforded by detailed forecasting can strengthen leadership and boost employee wellbeing as increased confidence in decision-making leaves the organization feeling more secure — improving morale and positive outlook. The right forecasting tools also facilitate data democratization — making reliable insights accessible to teams across the organization and fostering a culture of empowerment, foresight, and strategic thinking. 

Benefits of accurate business forecasting 
Potential qualitative gains for enterprises

The reduced business uncertainty achieved through forecasting-informed strategic planning also, more concretely, helps maximize sales and minimize waste — boosting profits. More accurate planning cycles, informed by projected consumer buying behavior and market characteristics, leaves teams across the organization better equipped to succeed. Product teams can time launches to coincide with an expected upswing in consumer demand, marketing teams can design promotional strategies that capitalize on market trends and opportunities, operations teams can streamline production, distribution and inventory management, and more. More broadly, resources can be reallocated proactively to mitigate the damage of anticipated disruptions or overall market shrinkage.

Some indices have the power to influence major shifts in financial markets — and some, like those by GfK, are even cited by the likes of the Financial Times. But while these measures are a robust indicator of market and consumer behavior, GfK Forecasting solutions adds an additional layer of value by turning these insights into easily understandable forecasts that teams across the organization can leverage. 

Let’s take a closer look at the impact of one real-life AI-led forecasting tool from the GfK Forecasting solutions suite, gfknewron Predict. A Total Economic Impact™ study, commissioned from Forrester Consulting, examined the benefits, costs, and risks associated with investing in the complete gfknewron suite, comprising gfknewron Consumer, gfknewron Market, and gfknewron Predict. For the purpose of the study, they interviewed 5 business leaders experienced in using the platform, aggregated the findings and combined the results into a single, composite organization. 

Forrester found that gfknewron Predict, in combination with gfknewron Consumer and gfknewron Market, can deliver up to 345% return on investment, with the improvements to strategic planning and operations through more accurate — and easy-to-use — forecasting streamlining everything from pricing, to portfolio and inventory management, go-to-market strategies and operational costs. 


Critiques and challenges

The quality of data and the sophistication of the AI-models used impact how effective forecasting is at predicting market and consumer trends and minimizing business uncertainty. For instance, business forecasting is often criticized for its reliance on historical data — with a significant time delay between the present moment and the data accessible to the forecasting tool. This misconception — that a significant time delay is unavoidable — conflicts with the business drive for agility, hamstringing adoption.  

Identifying trends using historical data does decrease the accuracy of predictions when extrapolating those trends over coming months or years. Manual, spreadsheet-based forecasting also slows things down to a point of absurdity and introduces unacceptable margins of human error. Yet, state-of-the art, AI-led forecasting services and tools like gfknewron Predict helps businesses overcome this limitation with easily-to-use, expansive data sets updated in near real-time to reflect current consumer behavior. Today, forecasting enables agility instead of restricting it.  

Another significant challenge is that forecasting models are generally unable to account for their own organizational impact if they heavily influence strategic planning. For example, if leadership and teams become overly-reliant on external forecasting the company may risk straying from its strengths or brand vision — instead chasing trends and peripheral opportunities indiscriminately. 

Businesses who seek out forecasting solutions that counteract this with high-quality data that’s up-to-the-minute can rely on projections that are regularly corrected to account for their activity. For example, gfknewron Predict delivers insights using advanced machine learning that draws from the world’s largest sample of transactional data to share rolling forecasts that are updated as the market chances — as a result of business, competitor, market or consumer activity.  

Overall, forecasting should empower top-performing market players to shape the future, not be defined by it. This philosophy drives GfK forecasting services and tools like gfknewron Predict — evolving from a prescriptive AI-as-a-service to AI-as-a-companion, providing bespoke 24/7, data-driven advice. 

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Discover how this business forecasting solution ensures you accurately predict — and plan for — the impact of new products entering the market, changes in product life cycles, shifts in consumer behavior, and more.