Apart from that, little information is actually exchanged. Although for some industries and certain supply chains this picture is slowly changing, it is still the reality for many businesses. Forecasting in such an environment is like crystal ball gazing. Understanding what causes the demand patterns in such circumstances is vital and crucial to any forecast. Without detailed understanding of the goings-on further upstream forecasting becomes a pure betting game, and then one is either lucky or wrong.
Forecasting involves greater or lesser risks for almost any business.
Rather than forecasting demand, companies should aim at knowing demand. Current focus in management is not on knowing demand, but on forecasting demand. Finding ever more sophisticated formulae or forecasting models seems more important and worthwhile a pursuit than trying to get away from the need for forecasting. This is understandable. It is easier and more secure to hide behind the inadequacies of a complex forecasting model and blame the mathematicians or the technology for any wrong forecasts.