REFLECTION ON FORECASTING
By
JERIC S. ANDRADA
A forecast can play a major role in driving company success or failure. At the base level, an accurate
forecast keeps prices low by optimizing a business operation – cash flow, production, staff, and financial
management. It helps reduce uncertainty and anticipate change in the market as well as improves
internal communication, as well as communication between a business and their customers. It also
helps increase knowledge of the market for businesses. Moreover, a promising forecast is compelling
to investors who might be interested in putting money into a business.
It determines what is going to happen in the future by analyzing what happened in the past and
what is going on now. Thus, Forecasting relies on past and current data and the analysis of trends.
Whether or not a forecast is accurate is important for sure, but it is not the only value derived from the
forecasting process. Forecasting is almost equally a valuable opportunity to reassess the assumptions
and estimations a business follows in bringing its products to market as they are a tool to predict the
future.
However, forecasts can be made more reliable if the assumptions and estimations used are supported
by preexisting data that is based on solid market behavior drivers. By using data that considers why
consumers of your products behave as they do, the reliability of forecasts increase. Therefore, it is
important for businesses to establish a forecast early, refine it as intelligence is gathered regarding
their understanding of customer behavior drivers, and iterate to achieve a higher degree of accuracy.
Assessing the quality of past forecasts with respect to their accuracy and consistency with gathered
are as accurate and unbiased as we can reasonably expect them to be, and to do this as efficiently
as possible.