Better Forecasting

Author: Paul Henriques in: Customer Relationship Management (CRM)

June 2, 2023

Better Forecasting

It seems like the peaks and valleys of the market have never been so fast and difficult to predict. From supply issues creating shortages to inflation woes cutting customer demand, it has been a very interesting beginning to the decade.

The response from manufacturers has, of course, varied with the market in an attempt to maintain order schedules while minimizing inventory. This means that Just-In-Time has been tested and re-tested, where from one quarter to the next, the material on hand required to meet demand has fluctuated furiously.

Heading into the 3rd quarter of 2023, inflation and recession fears has demand in many industries on the edge of a dive, which leads to forecasting reviews and trying to find ways to improve your abilities to deal with new issues.

To better handle these peaks and valleys of demand and supply chain issues, you need to rethink your forecasting methodology. Agile forecasting may be the answer. Agile is all about rapidly responding to changes. With Agile, you can become more effective at taking corrective action to address new issues that let you keep your competitive advantage.

Creating Agile Forecasting

To add agility to your production forecasting, you need to integrate, multiply, and compare.

Integrating the Forecast

To put it simply, depending on anything but an integrated ERP for your forecast data is a losing proposition. Using a manufacturer-ready ERP with an integrated forecasting module allows you to tie in all the various parts of your firm, from sales to shipping. This means that you have a clear view on past and present data, along with a view of market trends that can help you better foresee your customer needs and production capacity.

Integrating the production and sales forecast improves your future-sight and allows you the following competitive advantages:

  • Precise Planning – With an integrated production forecast, you will know how many finished parts you need to meet the forecasted sales demand.
  • Rapid Response – By having the forecast integrated, you will get real-time updates from the shop floor which allow you to quickly change to address issues in your supply chain, shifts in your market, or customer demand.
  • Improved Efficiency – The integrated forecast allows you to be lean with your order policy efficiency with EOQ (Economic Order Quantity) so that you always have stock on-hand while minimizing order and carry costs.

Multiply the Forecast

Forecasting your sales future is a crucial tool for successful manufacturers. But you have to know that the forecast is accurate and trustworthy. Using a centralized digital system like an ERP to perform your forecasting allows you to run multiple forecasts with any number of variations to account for the most likely scenarios.

This allows you to perform side-by-side comparisons while accounting for new prospective customers, changes due to the weather or season, or year-to-year analysis. And as you get are more concrete picture of the planned future, you can start consolidating your data into a master integrated forecast.

Compare the Forecast

With the multiple integrated forecasts receiving data from your MES, the ERP can easily compare the master forecast to the current information. This means your team can leverage any new data to plan changes and make improvements to your departments, whether it is a delay in sales, accounting, production, purchasing, shipping, or anything else.

By having the ability to compare, you target the processes that net the least accurate results and engage in the Lean PDCA cycle of continuous improvement.

Conclusion

Adding Industry 4.0, via ERP, to your business doesn’t just improve your shop floor, but, with Agile methods, improves all your operations. With integrated forecasts you can improve your capacity planning while being more responsive to changes in your market and improving your total efficiency.

Agree/ Disagree? Tell us what you think below!

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