Business forecasting today

AI advancements have made efficient, high-quality forecasting available to a wider range of organizations than ever before. And companies worldwide are investing heavily in the necessary technology and in talent acquisition. 

Yet, despite its effect on data democratization and its now critical role in sales, expenditure, and profit optimization, a surprising number of businesses still rely on manual forecasting, or even neglect forecasting altogether. 

The most resilient businesses have prioritized AI-led forecasting, placing it at the center of organizational strategic planning — using innovative solutions like gfknewron Predict to drive ROI, and transform the way they operate in today’s fast-paced, highly-competitive landscape. 

Recent breakthroughs in Artificial Intelligence have turbocharged an organization’s ability to forecast, and do so accurately. Just six years after Google researchers introduced transformer models to the world in their paper Attention Is All You Need at the 2017 NeurIPS conference on Neural Information Processing Systems, ChatGPT took the world by storm. 

In business, some of the world’s biggest Tech and Durables manufacturers — previously reliant on statistical methods — have been using GfK’s transformer-based forecasting services to drive strategic decision-making for over a year.  

Alongside traditional expert- and panel-based forecasts, forecasting driven by data-science has taken podium position in the competition to reduce business uncertainty, costs, and missed opportunities. Early adopters of these AI-driven models have been proven to save more, boost morale, and deliver clearer strategic development planning and goal setting within their organizations.  

Forecasting is now big business. By 2020, a McKinsey study found that 76% of surveyed C-suite executives had invested forecasting efforts of some kind at their organization. However, the purpose, scope, and granularity of their processes were far from standardized, depending instead on their specific business needs. Most concerning is that 40% of respondents shared that they weren’t satisfied with the outcome of their investment, battling inaccurate predictions and slow processes. Only 6% were completely satisfied with their forecasts. 

These numbers have almost certainly grown. More organizations now invest in forecasting and, unfortunately, the gap is also widening between those who’ve invested in the right tool and are satisfied with the outcome and those unable to find and leverage the best, latest forecasting solutions to their advantage.

What’s clear is that forecasting has become an indispensable tool for business leaders, with both one-time and rolling forecasts used to estimate and predict sales, expenditure, and profits and drive everything from promotional campaigns to new-market entry and go-to-market strategies. Yet, it’s only useful if accurate forecasting data is available, embraced, and used correctly. Ignoring these pillars risks inaccurate results, slow strategic response times, and overlooked opportunities that result in lost revenue.  

Shockingly, many SMEs and large enterprises still rely on manual processes to meet their forecasting objectives.  These involve everything from manual data capture and modeling, to forecasting via spreadsheets. Further, some businesses are not investing in forecasting initiatives at all.  

In today’s highly-competitive landscape, this is not feasible. Thankfully, accurate forecasting is increasingly accessible. Available technology, and the ability to gather, manipulate and interpret big data has been greatly simplified for business users, most significantly for people with little-to-no data science expertise.  

AI-powered predictive analytics can now be transformed into digestible, understandable recommendations for all teams — placing data-informed decision-making at the heart of organizational planning. Data democratization at its finest. 

Business intelligence leaders, such as GfK, hold unparalleled knowledge of multiple industries — in this case, leveraging more than 88 years’ worth of data and expertise to deliver consumer and market insights to the world’s biggest brands. Now, with innovations in AI, their transformer-based forecasting service gfknewron Predict ensures these brands tap into these insights via proactive, rolling forecasts that help their decision-makers plan ahead with confidence. 

Quick, informed and effective decision-making in response to changing market conditions and consumer behavior lies at the core of business success. Most recently the COVID-19 pandemic, the rise in global conflicts and simmering geopolitical tensions threatening supply chains, and spiraling inflation rapidly upended the business landscape — demonstrating that businesses who react slowly to disruptions face disastrous consequences.  

For example, a GfK internal study found that sales in Great Britain for some product categories dropped quite suddenly by around 10% following the September 2022 UK mini budget. This necessitated a downward adjustment to gfknewron Predict forecasts and a quick response from affected businesses wanting to preserve their success. Those who rely on quarterly forecasts would have been unaware of the mini budget's impact for three months, losing significant market share to their better informed, more agile competitors. 

Businesses that react fast but poorly face the same risks. For example, during initial COVID-19 pandemic lockdowns, many businesses assumed demand for non-essential goods would plummet. In fact, the opposite happened, as anticipated by gfknewron Predict, which differentiates between forecasts for online- and offline sales. E-commerce skyrocketed, leaving consumers hanging as demand outstripped supply. 

The cost of inaccurate forecasts 
Impact of poor decision-making during the COVID-19 pandemic lockdowns  

Businesses that expected demand for non-essential goods to decline during lockdowns and did not prepare, missed out on double-digit growth of e-commerce sales in multiple TCG categories. The graph below shows the growth in revenue share of online vs offline channels in Black Friday week 2020 compared to the same week in 2019.

Growth in revenue share of online vs offline channels in Black Friday week 2020 compared to the same week in 2019. 

Demand via online channels surged again in 2023 — surpassing even pandemic-driven peaks — proving e-commerce's enduring appeal for non-essential goods. 

It’s impossible to predict the future with 100% certainty. However, this can work in a business’ favor, as forecasting maps possibilities — enabling them to act on a potential future and shape it to their advantage. In this way, forecasting tools are invaluable for scenario planning and generating a quantifiable projected impact of each potential decision. This has led to growing interest in digitized forecasting solutions targeting several distinct business areas, including Product Lifecycle Management, Supply Chain Management, and Sales & Operations Planning. For example, GfK alone offers four different forecasting solutions:  

• gfknewron Predict: An always-on, platform-based solution designed to assist teams across large manufacturers and retailers in multiple sectors. 
• Boutique for Equity: Forecasting publicly traded firms’ share prices for specific use by financial institutions.  
• SIMA: Specializing in supply chain forecasts for high-tech components such as smartphones and TVs. 
• Scenario Forecasting: Delivering long-term, customized strategic planning forecasts to large manufacturers and retailers in multiple sectors. 

Arguably the biggest driver for the adoption of forecasting technology is, ironically, one of its biggest challenges: the growing number of variables that must be considered in strategic planning decisions. Increasingly complex and globalized supply chains mean businesses must keep track of (and plan for) socio-political, regulatory and economic factors across an increasing number of regions.