.
Case Study:
Demand Forecasting / International Consumer Package Goods
A crystal ball for multiple complex variables over time: anticipating industry trends 10-20 years out to inform customer-ready strategy
Major beverage company uncovers causalities in the market and their impact on their industry
Challenge:
Perform reliable 10 to 20-year horizon industry trend projections to drive strategic decisions
COVID-19 has brought unprecedented disruptions to any company involved in the distribution of goods consumed during social occasions. The shift in consumer behavior impacts all aspects of the supply chain, from sourcing to distribution, from pricing to inventory management. As strategies need to be entirely revised, companies need a customer-centric “flight simulator” to run scenario analyses to inform their business decisions.
Forecasting with a short to mid-term horizon can be based on historical data and machine learning algorithms, as we have done in other works. However, forecasting several decades into the futures requires a radically new approach since at these time horizons the entire industry may shift and the drivers of today may not be the drivers of tomorrow. A deeper, causal understanding of the future is therefore required, driven by data as well as expert opinions.
Solution:
Apply system thinking to connect the various industry and societal forces in a causal model that captures the large-scale trend variations
A long-term forecast cannot be based on extrapolating from the past but must account for holistic changes in society, trends, climat, and industry shifts. In turn, this can be done if the relationship between these effects is properly mapped, and then modeled.
1. Mapping the industry: Teranalytics worked very closely with the customer to understand and capture the strategic thinking of the C-level suite
2. Modeling the industry: using data and tested hypotheses, Teranalytics developed a System Dynamic model calibrated to the past and predictive of the future.
Results:
Perform reliable 10 to 20-year horizon industry trend projections and drive strategic long term decisions
1. Clear driver analysis and impact on multiple brands
2. Stress-tested the business model, including extreme disruptions to enable proactive planning
3. Inform long term company direction and investment strategy.
Client Feedback:
“To ensure market leadership and maximum long-term profitability, we need to anticipate future consumer choice in the face of dynamically moving variables. Teranalytics is the closest we’ve come to having a crystal ball.”
– Chief Strategy Officer-
