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Forecast Accuracy and Volatility: A Comparative Analysis

In contemporary business practices, understanding the future is critical. One area where predicting the future holds significant importance is Workforce Management (WFM). Here, forecast accuracy and a deep study of volatility play substantial roles, but it's essential to recognize the latter's increased significance.

Forecast accuracy undoubtedly, plays a vital role in WFM. An accurate forecast of customer traffic can optimize workforce scheduling, enhance customer service, and ensure operational efficiency. Improving forecast accuracy helps minimize expenses on unnecessary overtime and underused resources. Accurate forecasts allow businesses to prioritize staffing during peak periods, improving customer satisfaction while avoiding overstaffing during non-peak hours.

However, an exclusive focus on forecast accuracy can lead to overlooking another critical factor: volatility. Even the most highly accurate forecasts provide a single projection. The crux lies in that the future is not a single point but an array of possible scenarios, leading us to the importance of studying volatility.

Volatility considers the range of potential outcomes and the likelihood of their occurrence. It helps anticipate variations or unpredictability in data patterns over a particular timeframe. A thorough volatility analysis is even more critical than forecast accuracy, providing a more comprehensive view of potential scenarios. For instance, if we observe that our forecast has high volatility, it implies the predictability of the volume of incoming work or customer traffic is low.

This, in turn, means there is a higher risk involved for the business. Understanding and embracing this volatility introduces an additional layer of resilience into our planning. Actions can be taken to manage the risks associated with volatility, such as employing a more flexible staffing policy or investing in cross-skills training.

Moreover, a focus on volatility helps organizations adopt a more proactive approach. By expecting the unexpected, companies can effectively strategize their problem-solving and crisis-management strategies, thus staying a step ahead.

At WFM Labs, we are shifting from solely pursuing forecast accuracy to a nuanced understanding of volatility. This can make forecasts more practical



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