The Success of Business Forecasting: Comparisons Across Industries

Abstract

Purpose: This study measures and assesses the accuracy of forecasts by industry branches. Such an investigation provides a view on the relative benefits of forecasting in different industries.

Design/methodology/approach: Accuracy is studied here by investigating survey data covering manufacturing firms in the U.S. and Germany. The two data sets are conceptually different and cover different time periods: the U.S. data mostly cover the 1980s while the German data have been continuously available since the 1990s.

Findings: As it turns out we can identify industries that are among the most (e.g., electric machinery) and least accurate forecasters (e.g., the food industry). These findings can be of help for management in different industries and countries regarding whether resources should be allocated to forecasting. Yet, the printing industry – at the top of the U.S. ranking and towards the bottom in Germany – reminds us of the structural changes affecting the production processes and the need for forecasting.

Practical implications: The findings can help management to make decisions regarding the allocation of resources to forecasting.

Originality/value: This study presents a widely applicable approach to measuring and comparing forecasting performance across industries.