This blog offers an explanation of what is AI forecasting, its purpose in business, and the advantages associated with it. AI forecasting is an AI division that creates predictions about the future with no human input. AI planning programs utilize time series data to forecast trends in a variety of industries, such as retail, healthcare, sales, financial services, and manufacturing.
What is AI forecasting used for?
Organizations can prevent common planning difficulties, such as lengthy delivery times, expensive shipping costs, surplus stock, overstaffing or understaffing, and poor decision-making due to incorrect predictions, by making use of Artificial Intelligence and Machine Learning technology for forecasting.
Let’s look at two common forms of forecasting or predictions that businesses normally use:
Demand Prediction Forecasting
Having an awareness of the necessary supplies, goods, and staff needed for a thriving business is essential. Making conjectures about future labour requirements enables businesses to plan and accurately meet their customers needs. Accurate demand prediction forecasting of resources is key to satisfying both internal and external demand.
Growth Prediction Forecasting
This software aids in anticipating the growth of sales, providing users with the necessary tools they need to plan and develop their business developments.
When it comes to planning and strategizing, predicting the sales/revenue growth of a business is vital. By utilizing data on potential progress, companies can make wise decisions regarding budgeting, resource allocation, marketing approaches, and operational operations, like where to store inventory and how to handle customer subscription cancellations.
What are the advantages of AI forecasting over traditional methods?
Thanks to AI, forecasting has become much quicker and more efficient. This is due to its ability to select the right forecasting methods for various products and put them together into individualized forecasting models without needing manual labour. The primary advantages include:
- Automation: The entire process of forecasting can be automated without the need for human intervention.
- Scalability: An automated forecasting pipeline can be used to build forecasts for a small number of stores or a larger amount – up to 10,000.
- More Reliable Predictions: the most advanced AI and Machine Learning based forecasts will always be more accurate than estimates from managers, spreadsheets, or other traditional methods, providing better data to base decisions on.
- Optimum Accuracy: Automation of the process and lack of manual input minimizes errors in the data.
- Speedy: An automated pipeline can generate a forecast in seconds. Additionally, cloud-based technology allows many AI’s to run simultaneously, providing forecasts in near real-time.
- Neutral: An AI does not have any inherent biases or opinions like human managers do.
- Multiple Data Sets: An AI is capable of incorporating multiple data sets when searching for patterns, such as a weather forecast by postcode for a retailer with multiple locations.
- Utilizing Staff: Not only do AI’s generate better forecasts than those done by humans, but they also save the time it takes to do them – allowing staff to use their skills elsewhere.