Advantages and Disadvantages of Forecasting Methods in Operations Management

10/15/19, 10:00 AM

Forecasting methods are a primary tool that is commonly utilized by manufacturing facilities around the globe. Without utilizing forecasting methods, your operation may be unsure of what demand consist of and therefore how much to produce within a given time period. Organizations that use forecasting methods primarily use it to implement production strategies that enable their facility to operate more efficiently and cost-conscious. 

Advantages and Disadvantages of Forecasting Methods in Operations Management

Forecasting may involve using various different methods of estimating potential future outcomes for a business or operation. Developing a plan for these possible outcomes is the overall job of operations management. Additionally, operations management involves the management of processes that are required to manufacture and distribute products. Some of the important aspects of operations management include creating, developing, production, and distributing products for the manufacturing operation. 

Advantages of Forecasting Methods in Operations Management 

As mentioned previously, an organization uses a variety of forecasting models that assess any potential outcomes for an operation. Methods that are utilized by an organization entirely depend on the data available as well as the industry or market in which the company operates. Without adequate forecasting methods, your product could fall short and ultimately cost your operation more money than is necessary. The overall primary advantage of forecasting is that it provides a business with valuable information that the business can use to make decisions about the future of the organization. It is also important to have experts within the organization that can make proper judgement calls based off of the data that is being given. 

Disadvantages of Forecasting Methods in Operations Management 

Unfortunately, it is not entirely possible to forecast the future. You will always have variation in demand that change year to year, which is based off of marketing efforts, competitor efforts, macro and micro economic factors, and more. Year-to-year there will be variations in demand that will not be spot on with your historical demand forecast. Also, because of the qualitative nature of forecasting, a business can come up with different scenarios depending upon the interpretation of data. Organizations should never completely rely on any forecasting model. However, an organization can effectively utilize forecasting methods with various other tools of analysis that give the absolute best potential information pertaining to the future. Making a decision off of a bad forecast can cost a company large sums of money, so it is important to interpret the data correctly and utilize other tools as well. 

A software that can aid with accurate forecasting is Advanced Planning and Scheduling (APS) software. Advanced Planning and Scheduling (APS) software is a key component within manufacturing operations that are seeking to manipulate areas within their production facility and enhance overall operational efficiency as well as eliminating cost within the operation as well. Advanced Planning and Scheduling (APS) software is a must for manufacturing facilities that are seeking to take their production up a notch and maintain a competitive edge within their industry. 

Advanced Planning and Scheduling Software 

Advanced Planning and Scheduling (APS) software has become a must for modern-day manufacturing operations due to customer demand for increased product mix and fast delivery combined with downward cost pressures. APS can be quickly integrated with a ERP/MRP software to fill gaps where these system lack planning and scheduling flexibility and accuracy. Advanced Planning and Scheduling (APS) helps planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans.

  • Create optimized schedules balancing production efficiency and delivery performance
  • Maximize output on bottleneck resources to increase revenue
  • Synchronize supply with demand to reduce inventories
  • Provide company-wide visibility to capacity
  • Enable scenario data-driven decision making

Implementation of Advanced Planning and Scheduling (APS) software will take your manufacturing operations to the next level of production efficiency, taking advantage of the operational data you already have in your ERP.

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Topics: Forecasting

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