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The Revival of Forecasting in Manufacturing Environments

Author : Elizabeth Huston789
Publish Date : 2021-04-19 08:10:37
The Revival of Forecasting in Manufacturing Environments

In a manufacturing environment successfully forecasting demand is critical. This capital-intensive industry with finite capacity relies heavily on forecasting accuracy to achieve business goals.

Those organizations that put in place the proper resources in this area can gain a real advantage over their competitors. Unfortunately during the last couple decades the professional development into the art of forecasting has eroded.

Organizational downsizing has eliminated and combined many roles. Today a business might merge three roles into one e.g., Master Scheduler, Customer Service and Expediter. The advancement of technology has made this possible.

However by combining roles employers give up depth of knowledge for breadth of knowledge. A typical day is spent more on tactical actions such as fire fighting rather than strategic tasks such as forecasting.

The simple definition of "Forecasting" is an "educated guess." But if you're not educated in forecasting than you're just guessing. How much time do you think a Meteorologist spends on creating the weather forecast or an insurance Actuary forecasting risk? Obviously they are given the tools, training and time necessary to perform their mission. Can forecasting methodology be improved? Yes once we refocus and challenge the conventional assumptions.

Just think of the impact Doppler radar had on forecasting the weather? It has advanced forecasting so much that the ordinary person given the proper tools can predict the weather! You tune to the weather station that is most reliable; your insurance company can only offer you an affordable rate if they have properly accessed future risks.

These professions understand the importance of forecasting / guessing the future better than the competition.

Compare this to a normal production Schedulers in a manufacturing environment that barely has the time to properly level load. There is virtually no time available to develop or recommend system enhancements. The complexity of forecasting makes it a task that must be valued and developed.

With the advances in computing power we should be able to run multiple simulations simultaneously. However we still accept limitations in ERP systems that require overnight batch processing

Real world tips for reviving your forecast program

Access your current model by asking each functional department how they forecast.

Use one system preferably ERP (that's why you purchased it) to enter and analyze all your data.

The database should have at least three forecast fields for quick review and comparison

Customer backlog field - This is the raw schedule as request by customer.

Production forecast field - Data that will drive your RCCP (Rough Cut Capacity Plan).

Sales Forecast field - Based on collaboration with production.

Institute an ongoing professional development program though organizations such as APICS (Association of Operation Management). For example Schedulers should recognize the difference of intrinsic, extrinsic and qualitative forecasting.

Establish a forecasting model for each product and/or customer.

Organizations must provide the time and resources for Schedulers to properly forecast.

Be sure departmental performance measures are not contradictory. Production, Marketing and Finance departments should work to similar goals.

Finally bring back S&OP (sales and operation planning) culture and practices to your organization. This is not a new program rather just and old that never should have been abandoned.

Reviving your forecasting program will reap benefits almost immediately. The first benefit will be the clarity that having all information in one place will provide. The second benefit will come from enhancing the training and professional development of your forecasting professionals. Going forward I recommend organizations invest in their people first, and software second to remain competitive.

 

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With over 30 years manufacturing experience in the agriculture and aerospace industry, David Bueford has a wealth of knowledge as a true practitioner. Primary focus is in the areas of Production and Inventory Control and Procurement. Please feel free to discover more professional insight or continue the conversation at
In a manufacturing environment successfully forecasting demand is critical. This capital-intensive industry with finite capacity relies heavily on forecasting accuracy to achieve business goals.

Those organizations that put in place the proper resources in this area can gain a real advantage over their competitors. Unfortunately during the last couple decades the professional development into the art of forecasting has eroded.

Organizational downsizing has eliminated and combined many roles. Today a business might merge three roles into one e.g., Master Scheduler, Customer Service and Expediter. The advancement of technology has made this possible.

However by combining roles employers give up depth of knowledge for breadth of knowledge. A typical day is spent more on tactical actions such as fire fighting rather than strategic tasks such as forecasting.

The simple definition of "Forecasting" is an "educated guess." But if you're not educated in forecasting than you're just guessing. How much time do you think a Meteorologist spends on creating the weather forecast or an insurance Actuary forecasting risk? Obviously they are given the tools, training and time necessary to perform their mission. Can forecasting methodology be improved? Yes once we refocus and challenge the conventional assumptions.

Just think of the impact Doppler radar had on forecasting the weather? It has advanced forecasting so much that the ordinary person given the proper tools can predict the weather! You tune to the weather station that is most reliable; your insurance company can only offer you an affordable rate if they have properly accessed future risks.

These professions understand the importance of forecasting / guessing the future better than the competition.

Compare this to a normal production Schedulers in a manufacturing environment that barely has the time to properly level load. There is virtually no time available to develop or recommend system enhancements. The complexity of forecasting makes it a task that must be valued and developed.

With the advances in computing power we should be able to run multiple simulations simultaneously. However we still accept limitations in ERP systems that require overnight batch processing

Real world tips for reviving your forecast program

Access your current model by asking each functional department how they forecast.

Use one system preferably ERP (that's why you purchased it) to enter and analyze all your data.

The database should have at least three forecast fields for quick review and comparison

Customer backlog field - This is the raw schedule as request by customer.

Production forecast field - Data that will drive your RCCP (Rough Cut Capacity Plan).

Sales Forecast field - Based on collaboration with production.

Institute an ongoing professional development program though organizations such as APICS (Association of Operation Management). For example Schedulers should recognize the difference of intrinsic, extrinsic and qualitative forecasting.

Establish a forecasting model for each product and/or customer.

Organizations must provide the time and resources for Schedulers to properly forecast.

Be sure departmental performance measures are not contradictory. Production, Marketing and Finance departments should work to similar goals.

Finally bring back S&OP (sales and operation planning) culture and practices to your organization. This is not a new program rather just and old that never should have been abandoned.

Reviving your forecasting program will reap benefits almost immediately. The first benefit will be the clarity that having all information in one place will provide. The second benefit will come from enhancing the training and professional development of your forecasting professionals. Going forward I recommend organizations invest in their people first, and software second to remain competitive.

With over 30 years manufacturing experience in the agriculture and aerospace industry, David Bueford has a wealth of knowledge as a true practitioner. Primary focus is in the areas of Production and Inventory Control and Procurement. Please feel free to discover more professional insight or continue the conversation at
 



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