Five Reasons You Should Forecast in Supply Chain

10/24/19 10:30 AM

Forecasting is by far one of the most important attributes associated with manufacturing operations and supply chain management. With the various methods that are associated with forecasting, your company and operation should attempt to locate the method that you find to be the most beneficial and accurate.

Five Reasons You Should Forecast in Supply ChainThere are various softwares available that can aid with this decision and also complete the forecasting for you. With these forecasting methods, you will see trends year-to-year that enable you to come closer and closer to the amount of inventory or product you will need on hand to fulfill orders on time. Without this, you find that production and inventory falls short and ultimately you will cost your manufacturing operation revenue and money in the long run. This is why forecasting in supply chain is so detrimental to your operation and production process. Therefore, within this blog, we are going to include five reasons that you should forecast in supply chain and manufacturing. 

Five Reasons You Should Forecast in Supply Chain 

The five reasons you should forecast in supply chain pertain to the following: 

  • Customer Satisfaction Increase - Customer satisfaction is absolutely essential to consider. If your customers are not happy, then you will find that they will be purchasing your product less and less - or maybe even not at all if there is a competitor that has a better product or service. In order to keep your customers satisfied, you will need to provide them with the product that they want and when they want it. Proper and adequate forecasting in business will aid in the prediction of product demand so that enough product is available to fulfill customer orders with short lead times and on-time. 
  • Inventory Stockout Reduction - Businesses need to realize and understand the importance of demand forecasting, especially if you are working with a JIT system or long lead time suppliers like India or China. If you are purchasing from long lead time suppliers, then you will find that you need to send a demand forecast in order for suppliers to arrange raw materials in anticipation of actual customer orders. Ultimately, this will ensure that you reduce stock outs while also ensuring that you are not overly producing stock as well. 
  • Adequate Scheduling of Production - With forecasting, you may have real-time data coinciding with historical data. Many forecasting methods (if not all) use historical data to locate the amount of demand that is needed every year within every season or quarter. Forecasting will give a some what close point of how much to produce and what demand may be, but you may want to consider a software that helps you with this decision process. These include MRP, ERP, and APS software. 
  • Proper Management of Shipping - Shipping and meeting customer order fulfillment times is by far one of the most important attributes associated with manufacturing today. With the supply chain giant Amazon, they have made it possible to receive one day order fulfillment. This has really ramped up the competition in terms of order fulfillment. Therefore, forecasting allows you to have a certain amount of stock on hand, ready to go at a moments notice and therefore complete an order within the timeframe needed by the customer. 
  • Enhance Pricing and Promotional Strategy - Production and manufacturing correlates directly with pricing and promotional strategies. If manufacturing cost are high, you will clearly see that your product cost are high as well. The goal is to bring your price down to the point where customers will purchase it. Improving the ability to forecast the impact price changes will gradually increase your revenue and gross margin dollars. 

If you find that you are unable to purchase an expensive forecasting software, utilizing excel spreadsheets can be a great alternative option. If you find yourself utilizing an ERP or MRP software, you may be seeking to locate another software that can fill in the gaps where these softwares lack in terms of efficiency. This is where many companies have found themselves utilizing Advanced Planning and Scheduling (APS) Software. Advanced Planning and Scheduling (APS) Software has become a necessity for manufacturing operations that are seeking to improve operational efficiency and overall reduce costs and waste within the production process. Advanced Planning and Scheduling (APS) Software is a must for manufacturers that are wanting to maintain a competitive edge and improve their operation as a whole. 

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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