How 7 Unique Industries Use Long-Range Forecasting for Competitive Advantage
Long-range forecasts potentially unlock new opportunities to become more cost-efficient. Effectively, you can save - or even 'make' - money with reliable long- term forecasts. It all comes down to being prepared and optimizing the decision-making processes.
Being informed and knowing the trends in advance can be a big help. It empowers you to prepare (at least to some degree) for the expected conditions. By managing your risks and opportunities, you'll be way ahead of the competition. For some sectors, it is undoubtedly about opportunities; an accurate and timely long-range forecast can make money.
To see how long-range forecasts help create competitive advantage, here are seven different ways seven different types of companies use them:
#1 Utility companies
Utility companies must know the likelihood of sustained and impactful climate anomalies well in advance. This insight is particularly useful if a season is likely to see a higher number of wind storms, increased episodes of heat and drought, or if snowfall and cold weather are likely to fall outside of seasonal averages.
They can make sure their backup teams are ready, and there is enough manpower available to deal with the issues. The more familiar they become with using these types of weather forecasts, the better they are prepared. The long-range forecast, therefore, becomes an integral part of the contingency plans. It means they can refine their strategic planning and are therefore able to meet water, electricity, or gas demand throughout a whole season.
#2 Energy traders and analysts
Energy traders and analysts are typically familiar with the benefits of long-range forecasts. They need to know if there could be a significant cold spell coming next winter or a significant heatwave in summer. These variables can have significant impacts on the demand and, therefore, the price of gas and electricity. For example, if winter starts very mild, then demand for gas will be lower than average, as people switch on their heating less or have the thermostat set at a lower temperature. The price of gas will fall, with excess gas being stored up.
A long-range forecast for the second half of winter, warning of colder conditions to come offers traders the opportunity to make money. They can purchase gas at the lower price, and then sell it back once prices rise as demand grows in the colder weather.
#3 Renewable energy
Wind and solar power are incredibly variable and very weather sensitive. However, as the demand for renewable energy sources grows, we are also seeing a rapid increase in the use of these types of energy production. While predicting wind and solar at long forecast lead times is often more challenging than predicting temperature, these companies can still benefit hugely from accurate, probabilistic, seasonal and sub-seasonal forecasts. When they get a view on the likely trends for the coming month or season, for instance, if it will be windier or sunnier than average, this allows them to make money or offset losses.
Reliable seasonal and sub-seasonal forecasts make it easier for food producers to monitor the whole growth process. It also enables them to provide a correct estimation of the harvest: both in terms of quantity as quality.
Estimating harvest time is essential because of the impact it has on downstream logistics, such as when trucks or planes have to be available. It also allows food producers to communicate when the products are likely to reach the shops or the auction.
#5 Emergency Services
Governments and emergency services want to keep weather-related risks to a minimum. Floods, lightning strikes, heat waves and cold spells cause disturbances and, without adequate preparation, can result in fatalities. In the event of extreme weather events, it might even lead to a state of emergency. As a safety organization or (sub)government, you have to be prepared. Long-range forecasts can play a significant role in this preparation. It's all about risk management, often accompanied by scenario planning, to be ready before the weather event occurs.
#6 Travel agencies and holiday planners
Knowing the likely weather conditions can help travel agencies sell holidays. For example, if a tour operator knows there is a lovely (warm, dry) period ahead on the long-term, they can use this long-range information for special offers and promotions. These campaigns are innovative and help to enable sales.
A clothing store must buy and sell their stock. A pivotal part of success is having the right inventory and the right time. If they are aware of long-range developments in the weather, they might optimize this workflow to reflect the likely conditions. For example, if you know that a cold snap is expected to occur earlier than usual, retailers can take advantage of this by stocking up on jumpers and coats. It saves money, it makes money, and it makes you stand out in the crowd. This same thinking also applies to food and drink companies (including beer, ice, and ice cream), as well as events companies.
Find out more by downloading the Long-Range Forecasts whitepaper and discover how you can help your organization manage risks and opportunities with advance meteorological techniques.