All articles

Your Data Knows What Happened. Can AI Help Predict What's Next?

12 min read
Data visualization dashboard showing performance metrics and AI-driven analytics on multiple monitors

Quick answer. The problem with cost forecasting is not a shortage of data. It is that costs don't move in isolation anymore. AI can help - but only if the data underneath it is connected, governed, and current. Without that foundation, even the most sophisticated model is working with a fragmented view of reality.

Believe it works

88%

of supply chain leaders agree scenario planning has a positive impact

Gartner, 2025

69pt gap

Actually practice it

19%

of organizations have fully integrated scenario planning into their supply chain strategy

Gartner, Dec 2024

That 69-point gap between belief and practice is where most forecasting efforts stall.

If you work in supply chain, procurement, finance, or operations, you already know how important cost forecasting is. You need to know what raw materials might cost next quarter. You need to plan supplier budgets. You need to estimate freight and logistics expenses. You need to understand how changes in demand could affect purchasing and inventory decisions.

And usually, you have plenty of data to work with. Historical costs. Supplier prices. Purchase orders. Freight rates. Demand forecasts. Currency data.

So why can forecasting still feel so difficult?

Why Forecasting Is Getting Harder

Because costs don't move in isolation anymore.

A forecast can look perfectly reasonable today and start looking very different a few weeks later. A supplier changes its pricing. Freight costs increase. A currency moves against you. Demand suddenly rises in one market. A geopolitical event disrupts a supply route.

Each change may seem manageable on its own. But when several happen together, their combined impact can be significant. And that creates a fundamental problem for today's supply chain leaders: how do you forecast costs when the variables driving those costs keep changing?

A single landed cost depends on all of these

Landed Cost
Supplier pricing
Raw materials
Freight rates
Fuel costs
Currency moves
Demand shifts
Supplier availability
Inventory levels
Regional disruptions
Market conditions

Now imagine trying to forecast that cost using only what happened last year. You might get reasonably close. But what happens when this year's conditions are completely different?

This is where traditional forecasting can become less useful. The question is no longer just: "What did this cost before?" It becomes: "What is changing around this cost, and what could those changes mean?"

The Problem Is Not Data Volume

For years, cost forecasting has relied heavily on historical data. And there is a good reason for that. Historical data tells you how costs behaved. It helps identify seasonality, supplier trends, demand patterns, and previous changes in spending.

But today's supply chains are dealing with a much more dynamic environment. Gartner describes geopolitical tensions, global trade and economic uncertainty as factors creating multiple potential outcomes for supply chain organizations. In a December 2024 survey of 506 supply chain leaders, Gartner found that only 19% of organizations fully integrated scenario planning into their supply chain strategies.

That tells us something important. Companies understand that they need to prepare for different possibilities, but many are still not fully equipped to do it. For a practical look at what readiness looks like before an organization invests in AI-driven forecasting, the six readiness pillars for retail and supply chain teams cover the data ownership, process standards, and decision-rights groundwork that makes any advanced tool actually deliver.

The challenge isn't simply having more data. It's being able to connect the right data and understand what it means for what comes next.

More data compared with connected data On the left, six datasets most supply chain teams already have, historical costs, supplier prices, purchase orders, freight rates, demand forecasts and currency data, sit apart and are looked at separately. On the right, the same six datasets are connected around one question: what comes next. MORE DATA THE RIGHT DATA, CONNECTED Historical costs Supplier prices Purchase orders Freight rates Demand forecasts Currency data Plenty of data, each dataset looked at separately what comes next Demand forecasts Supplier prices Purchase orders Historical costs Freight rates Currency data Connect the right data and understand what it means for what comes next More data compared with connected data First, six datasets most supply chain teams already have, historical costs, supplier prices, purchase orders, freight rates, demand forecasts and currency data, sit apart and are looked at separately. Below, the same six datasets are connected around one question: what comes next. MORE DATA Historical costs Supplier prices Purchase orders Freight rates Demand forecasts Currency data Plenty of data, each looked at separately THE RIGHT DATA, CONNECTED what comes next Demand forecasts Historical costs Freight rates Currency data Supplier prices Purchase orders Connect the right data and understand what it means for what comes next
The challenge is not having more data. It is connecting the right data and understanding what it means for what comes next.

How AI Changes the Forecast

AI is not a crystal ball. And it shouldn't be positioned that way. The real opportunity is to use AI to process more signals, identify relationships between them, and continuously update the forecasting process as new information becomes available.

IBM describes AI forecasting as a process that can learn from historical data while incorporating new data as it arrives. It also highlights the ability of AI forecasting to work with more variables and identify complex relationships that may be difficult to capture through traditional approaches.

For a supply chain organization, that could mean bringing together:

Internal data
Historical costs, purchase orders, supplier performance, inventory, demand
External data
Commodity prices, freight rates, currency movements, economic indicators, market conditions
Real-time signals
Supplier updates, demand changes, logistics events, operational alerts
AI forecasting engine
Identifies relationships across all sources, updates continuously

Instead of looking at these datasets separately, AI can help identify the relationships between them. And that changes what a cost forecast can actually tell you.

The greatest friction point in scaling intelligent forecasting today is not the model itself, but the data foundation into which it is being deployed.

Everest Technologies, on supply chain AI adoption

From One Forecast to Many Scenarios

This is where the idea gets particularly interesting. Instead of producing a single number, you can explore what happens under different conditions:

What if freight costs increase?
Model the margin impact across routes and carriers, identify where renegotiation or mode-shift offsets the delta.
What if the currency moves by 5%?
See the exposure by supplier currency, prioritize hedging or forward contracting where the swing is largest.
What if demand spikes?
Stress-test inventory positioning, supplier capacity, and fulfillment throughput against the demand curve before the quarter closes.
What if a key supplier faces disruption?
Map alternate sources, lead-time differentials, and cost-of-switch before the disruption becomes an emergency.

Now you're not simply producing a number. You're exploring possible outcomes.

One forecast compared with many scenarios On the left, a forecast leads to a single number. On the right, the same forecast branches into four scenarios: freight costs increase, the currency moves by 5%, demand spikes, and a key supplier faces disruption. Instead of producing a number, the team is exploring possible outcomes. ONE FORECAST MANY SCENARIOS Forecast a single number Simply producing a number Forecast Freight costs increase Currency moves by 5% Demand spikes Key supplier disruption Exploring possible outcomes One forecast compared with many scenarios First, a forecast leads to a single number. Below, the same forecast branches into four scenarios: freight costs increase, the currency moves by 5%, demand spikes, and a key supplier faces disruption. Instead of producing a number, the team is exploring possible outcomes. ONE FORECAST Forecast a single number Simply producing a number MANY SCENARIOS Forecast Freight costs increase Currency moves by 5% Demand spikes Key supplier disruption Exploring possible outcomes
A forecast does not have to end in a single number. Asking what happens under different conditions turns the same forecast into a set of possible outcomes to explore.

Gartner's 2025 research supports the growing importance of this approach: 88% of supply chain leaders surveyed agreed that scenario planning has a positive impact, while only 19% said it was fully integrated into their supply chain strategy. That gap is important. The value of scenario planning is increasingly recognized, but putting it into practice requires the right data, processes, technology, and skills.

The sequencing of those investments matters as much as the investments themselves. The best supply chain leaders settle the operating model question before any vendor RFP goes out - the same logic applies to data and AI strategy: define the model before selecting the platform.

AI Can't Fix Fragmented Data

This is probably one of the most important realities to understand. It is tempting to start with the AI model. But if supplier information is sitting in one system, freight data is somewhere else, market information comes from external sources, and important operational information still lives in spreadsheets, the AI model cannot simply make that fragmentation disappear.

The quality of the forecast depends heavily on the quality and accessibility of the data behind it. IBM specifically identifies data quality as one of the key considerations for AI forecasting. Its guidance also emphasizes that forecasting systems need ongoing monitoring because market conditions and data patterns change over time.

McKinsey makes a similar observation about supply chains, pointing to outdated infrastructure, fragmented data, and ongoing disruptions as barriers organizations need to address to get value from AI.

So a realistic AI forecasting strategy doesn't start with: "Where can we put AI?" It starts with: "Do we have the right data foundation for AI to actually help?"

Naive approach

Select an AI forecasting tool first. Connect it to whatever data is accessible. Produce a projected number. Discover that the model misses supplier pricing changes, freight spikes, and currency shifts because those sources were never integrated. The result is a forecast that looks precise but is systematically wrong.

What works

Start with the data foundation. Integrate supplier, freight, inventory, and market data into a governed single view - the same approach that Everest's Data Engineering practice applies for enterprise analytics. Then layer AI on top to identify patterns, model scenarios, and generate forward-looking forecasts that actually reflect the business.

Where Data Engineering and AI Work Together

This is also where the difference between an AI experiment and a useful business solution becomes clear. You need to first bring the relevant data together. Then you need to understand which variables actually influence cost. Then you can use AI and predictive models to identify patterns, test scenarios, and generate forward-looking forecasts.

Step 1
DATA
Historical + real-time + external signals, cleaned, integrated, and governed
Step 2
AI
Patterns + cost drivers + predictive models, retrained as signals arrive
Step 3
FORECAST
Projected costs + scenarios + risk signals, surfaced before they hit the business
Step 4
DECISION
Plan earlier. Adjust faster. Control costs with better information.

The technology behind this can be sophisticated. But the business objective is simple: give decision-makers more visibility before the cost hits the business.

Where Everest Comes In

This is where Everest's expertise in Data Engineering and AI becomes particularly relevant. Everest helps organizations bring fragmented data together and create the data foundations required for advanced analytics and AI.

From there, AI can be applied to identify cost drivers, model different scenarios, and generate forward-looking insights. The objective isn't to replace the people making supply chain or procurement decisions. It is to give them better information to make those decisions.

Data Engineering practice

Brings supplier, freight, inventory, and market data into a governed, integrated foundation so forecasting models work from a single version of the truth instead of disconnected silos. This is the same data-assembly problem covered in our analysis of why enterprise data isn't delivering.

Everest AI practice

Builds predictive models and scenario engines on top of that foundation, connecting internal operations with external signals so procurement and supply chain teams can explore what-if outcomes before costs materialize.

For example, instead of a procurement leader seeing that projected costs have increased, the system could help surface the factors contributing to that change. Instead of waiting for a disruption to affect the forecast, teams can explore different scenarios and understand their potential impact. Instead of reviewing a static forecast every few weeks, organizations can move toward a more dynamic view that incorporates new information as it becomes available.

From reporting costs to building cost intelligence Three shifts. Instead of only seeing that projected costs have increased, the system surfaces the factors behind the change. Instead of waiting for a disruption to affect the forecast, teams explore scenarios and their impact. Instead of reviewing a static forecast every few weeks, the organization works from a dynamic view that incorporates new information as it becomes available. REPORTING COSTS COST INTELLIGENCE Projected costs have increased Wait for a disruption to hit A static forecast every few weeks Surface the factors behind the change Explore scenarios and their impact A dynamic view with new information From reporting costs to building cost intelligence Three shifts. Instead of only seeing that projected costs have increased, the system surfaces the factors behind the change. Instead of waiting for a disruption to affect the forecast, teams explore scenarios and their impact. Instead of reviewing a static forecast every few weeks, the organization works from a dynamic view that incorporates new information as it becomes available. REPORTING COSTS COST INTELLIGENCE Projected costs have increased Wait for a disruption to hit A static forecast every few weeks Surface the factors behind the change Explore scenarios and their impact A dynamic view with new information
The objective is not to replace the people making the decision. It is to give them better information: what is driving a change, what different scenarios would mean, and a view that keeps up as new information arrives.

That is the difference between simply reporting costs and building cost intelligence.

The Goal Is Not Perfect Prediction

Let's be realistic. No AI model can predict every supplier decision, geopolitical event, currency movement, or sudden change in customer demand. The goal isn't to predict the future perfectly. The goal is to be better prepared for it.

A useful cost forecasting capability should help supply chain and procurement leaders:

  • See important signals earlier
  • Understand what is driving cost changes
  • Explore different scenarios
  • Make decisions before uncertainty becomes a problem

And that is where the conversation around AI in the supply chain becomes much more practical. It isn't about replacing the forecast that teams already use. It is about making that forecast more connected, more dynamic, and more useful for decision-making.

Turn uncertainty into cost intelligence.

Let's build a smarter cost forecast

Everest combines Data Engineering, AI, and business expertise to help organizations move from fragmented data and historical reporting toward forward-looking cost intelligence. Explore our supply chain services or get in touch to start the conversation.

Start the conversation
FAQs

Frequently asked questions

The main challenge is that costs don't move in isolation. Supplier pricing shifts, freight rates change, currencies fluctuate, demand spikes, and geopolitical events disrupt routes. When several of these happen together, the combined impact can make any single-number forecast unreliable. The problem is not a lack of data, but the inability to connect and interpret the right signals in time. Gartner's December 2024 survey of 506 supply chain leaders confirmed that most organizations are still not equipped to handle this complexity.

No. AI is not a crystal ball. It cannot predict every supplier decision, geopolitical event, currency movement, or sudden demand change. The goal of AI in cost forecasting is not perfect prediction. It is to help decision-makers see important signals earlier, understand what is driving cost changes, explore different scenarios, and make decisions before uncertainty becomes a problem. IBM's guidance frames it as a continuously learning process, not a one-time prediction.

AI models can only work with the data they can access. If supplier information lives in one system, freight data in another, and operational data in spreadsheets, no model can bridge that fragmentation on its own. Data engineering integrates these sources, ensures quality and consistency, and creates a governed foundation. This mirrors the integration and governance challenges most enterprises face with their broader data estates.

Instead of producing a single projected number, scenario planning asks what happens under different conditions: freight cost increases, currency shifts, supplier disruptions, demand spikes. This transforms forecasting from a passive report into an active decision-support tool. Gartner found that 88% of supply chain leaders see positive impact from scenario planning, yet only 19% have fully integrated it - largely because the data and process foundations are missing.

Internal data covers historical costs, purchase orders, supplier performance, inventory, and demand. External data covers commodity prices, freight rates, currency movements, and economic indicators. Real-time signals include supplier updates, logistics events, and demand changes. AI forecasting combines all three to identify relationships that traditional methods miss. IBM and McKinsey both emphasize this multi-source approach as the differentiator between useful forecasting and a backward-looking report.

Cost intelligence is the shift from reporting what costs were to understanding what costs could be, what is driving those potential changes, and what actions to take. It combines connected data, predictive modeling, and scenario exploration so procurement and supply chain teams make decisions based on forward-looking insight rather than backward-looking averages. McKinsey identifies this as one of the highest-impact applications of AI in supply chain, contingent on data quality and integration.

Start with a data assessment. Map where cost-relevant data lives today - supplier systems, ERP, freight platforms, spreadsheets. Identify the gaps in integration and governance. Then define the specific forecasting questions the business needs answered. Only then evaluate AI tools. For organizations building toward this, the automation sequencing framework and the AI readiness checklist are useful precursors.

Sources

  1. Gartner, survey of 506 supply chain leaders on scenario planning integration, December 2024
  2. Gartner, 2025 research on scenario planning impact in supply chain strategy
  3. IBM, AI forecasting guidance: learning from historical data while incorporating new data as it arrives
  4. McKinsey & Company, observations on fragmented data and outdated infrastructure as barriers to AI value in supply chains
  5. Everest Technologies, Data Engineering and AI practice capabilities