Forecast Accuracy Isn't a KPI

Let’s talk about forecasting. Most supply chain and commercial teams spend untold hours debating it, refining it, and reporting on it. And for decades, planning software has rewarded us with one main output: forecast accuracy.

This was fine—until we realized that forecast accuracy isn’t a business KPI.

Ask yourself:

• Does your CFO care if you hit 70% or 75% forecast accuracy last month?

• Will your CEO reward you for meeting last year’s MAPE target—if you still missed key shipments or wrote off millions in obsolete stock?

• Does anyone outside the demand planning team even know—or care—how “forecast accuracy” is calculated?

Probably not. And that’s the problem.

What Legacy Planning Software Gets Right

To give credit where it's due: legacy planning tools (including the usual suspects in the Gartner Magic Quadrant) are reasonably good at computing forecast error metrics. They’ll show how far off your forecast was from actual bookings. They’ll track that error over time. Some can even slice it by product, location, or channel.

But they stop there. They don’t tell you what it cost you.

They don’t show what portion of your excess inventory was the result of over-forecasting. Or how much margin you lost from discounting just to move it. Or how many customers you disappointed due to under-forecasting. Or how much cash is stuck in your network because someone missed a weakening demand signal.

They leave decision-makers flying blind.

The Metric That Actually Matters: Cost of Forecast Error (CoFE)

At VYAN AI, we believe it’s time to shift the conversation from error rates to economic impact.

That’s why we built Cost of Forecast Error (CoFE)—a business-focused metric that quantifies what bad forecasts actually cost you.

• Forecast too high? You’ll see not just the excess inventory—but the cost of carrying it, the margin lost to markdowns, and the write-offs from what couldn’t be sold at all.

• Forecast too low? CoFE reveals the cost of expedited production, emergency freight, lost sales, and customer erosion.

• And when safety stock saves the day? That too is counted—because just-in-case inventory isn’t free.

CoFE reframes the question from “How wrong were we?” to “What did it cost us to be wrong?”

And No, You Can’t Hide Behind Safety Stock

In traditional planning tools, it’s easy to mask forecast quality issues with big buffers. But with CoFE, poor forecasts can’t hide.

Because VYAN AI calculates CoFE as a derived measure directly from Cost-To-Serve calculations used to drive order-level fulfillment chains, we know:

• Where demand was served by planned supply vs. safety stock

• How often you burned through safety stock—and how deep

• Where inventory dropped to zero, and how much margin you lost

• Where bookings exceeded forecast—but didn’t drive incremental cost-to-serve

• When forecast exceeded bookings—how long the excess inventory sat, and what margin hit it took when it finally moved

It’s not a math trick. It’s a full-chain economic trace, grounded in real cost-to-serve logic, not time-series approximations.

Even Better: We Simulate It

One of CoFE’s most powerful features? Simulation.

• Want to know the revenue and profit upside if you improved forecast accuracy by 10%?

• Or cut systematic over-forecasting in Region X by half?

• Or replaced bloated buffers with smartly sized, risk-based reserves?

VYAN AI can simulate it. We show how CoFE changes across scenarios using both manual what-ifs and AI-scale Monte Carlo simulations—so you can stop guessing and start making evidence-based decisions.

You won’t just know whether your forecast got better. You’ll know whether it saved you money.

Meet VYAN AI: Planning Built for Business Impact

VYAN AI is not just a CoFE engine. It’s a next-generation enterprise optimization platform built for decision-makers who want more than cloud spreadsheets to run the same tired S&OP sequential process steps —and define value in hard dollars, not soft benefits. We don’t drive planners back into spreadsheets (they can do basic S&OP just fine there). We drive them towards VYAN AI, as they just cannot get this level of rigorous demand-supply pegging chain driven optimal cost-to-serve based advanced analytics and insights from spreadsheets.

We fuse AI-driven forecasting, supply-finance cost-to-serve optimization, and AI-scale scenario intelligence into one platform. So your team can model reality, generate plans that delight customers and deliver robust margin, stress test them for volatility, and execute with confidence.

We call it decision intelligence on steroids.

We don’t just show you what changed—or run a faster MRP to chase it. We show you what’s likely to change, what really matters—and how to act in ways your COO and CFO will both cheer for.

Join the Value Pilot (If You’re Ready to Lead)

We’re inviting a select group of enterprise customers into our Value Pilot Program—where you pay only for services during the pilot, with a commitment to license the platform if (and only if) we prove tangible value.

If you’re a business leader tired of chasing metrics that don’t move the needle…

If you believe planners should be measured not just by process fidelity but by financial outcomes…

If you want your team to understand—and reduce—the true cost of bad forecasts…

Let’s talk.