Planning and Forecasting I

Scenario planning 

Scenario planning is "a way to assert control over an uncertain world by identifying assumptions about the future and determining how your organization will respond." (Rami, et., 2020) In other words, scenario planning is strategic planning focused on vision, mission, values, goals, and action plans to guide the organization in the long term process. Therefore it is "making assumptions on what the future is going to be and how your business environment will change over time in light of that future." (Mariton, 2016, p. 2)

Why is scenario planning so important? Because this planning method can provide competitive advantages in the middle of the crisis to the organization. Another advantage of scenario planning is that it helps c-suite executives the "effects of various plausible events. Finance, operations and other teams can prepare initial responses." (Rami, et., 2020) 

But the significant disadvantage of scenario planning is the lengthy process to make the critical decision based on the ongoing data in terms of time. Time is always a substantial factor in planning, and time in this method could be a game-changer for finance, security, and any other fundamentals.

Traditional forecasting

Usually, researchers use traditional forecasting to predict the future based on the historical records of datasets of business performance metrics. So, traditional forecasting is the power of using "historical observations to estimate future business metrics like inventory requirements, budgets, revenue or asset performance." (Belotindos, 2020) This method, traditional forecasting, is used when there is a countable dataset and finite numbers of predictive variables are available. So, the more we have known datasets, the more we can take advantage of traditional forecasting. Therefore, we use predefined statistical methods and models such as linear regression in this technique.

The most significant disadvantage of traditional forecasting is when "practices fail because the past does not necessarily represent the future." (Belotindos, 2020, para. 2)

AI and DL vs. scenario planning and traditional forecasting 

In-depth machine learning forecasting is used in traditional forecasting with massive amounts of historical datasets to predict the best performance for the future. On the other hand, AI using machine learning uses a scenario planning mechanism to predict the future of business, science, and anything.

Reference

Belotindos, B. (2020, September 25). Live Forecasting vs Traditional Forecasting vs Rolling Forecasting. Performance Canvas. Retrieved 2022, from https://www.performancecanvas.com/live-vs-rolling-vs-traditional-forecasting/

Mariton, J. (2016). What is Scenario Planning and How to Use It. Smestrategy. Retrieved 2022, from https://www.smestrategy.net/blog/what-is-scenario-planning-and-how-to-use-it

Rami, Luther, A. D. (2020). Scenario Planning: Strategy, Steps and Practical Examples. NetSuite. Retrieved 2022, from https://www.netsuite.com/portal/business-benchmark-brainyard/industries/articles/cfo-central/scenario-planning.shtml