Demand forecasting is a commonly used process to help predict what both future and current customers are wanting in the future. This will not only tell a company or production facility what customers are buying, but also the products that the company should manufacture. Along with manufacturing, this also pertains to the setting of the price of the good and what markets should be best suited for the company. With proper and accurate demand forecasting, it allows for insight into what customers need, which can be forecasted through a variety of means and methods.
Demand forecasting ultimately will aid a company through preparing beyond their current period. This enables companies to be more efficient in their allocation of resources, which is extremely important for any manufacturing facility that is seeking to reduce waste within their operation - which should be all of them. Companies that utilize demand forecasting can easily find themselves getting ahead of competition and asses their own performance.
The Four Advantages of Effective Demand Forecasting
The four advantages of effective demand forecasting include the following:
- Tracking Sales - Production facilities use demand forecasting as the foundation for making sales projections. Sales numbers receive a lot of attention because they are the source of a company’s money stream. By analyzing demand properly, a production facility can make predictions about sales and allocate resources accordingly
- Strategy - Within manufacturing facilities, companies seek ways to gain an edge over the competition through marketing strategies and production efforts. Through utilization of demand forecasting for future periods, a company can alter its business and marketing strategy to satisfy expected demand by its customers base
- Controlling Costs - Demand forecasting also allows a manufacturing facility to control its production costs with ease. An example of this includes a company placing an order for raw materials ahead of its time to take advantage of favorable pricing if it forecasts an increase in demand. Demand forecasting allows a company to budget accordingly, making it more efficient than it would be in operating on a response basis only. A production facility can justify a reduction in spending for advertising and promotion if its demand forecast calls for it.
- Tracking Overall Performance - Tracking your overall performance is a must for your business. Every manufacturing facility should assess their performance. This means that you identify components within production that do well and that may not be performing very well. Demand forecasting gives the production facility the basis to compare actual demand with management’s expectations. Demand forecasting acts as a check and balance for your facility and enables you to identify how far its demand forecast is off from actual demand.
A software that can aid with proper demand forecasting is PlanetTogether’s Advanced Planning and Scheduling Software (APS). Advanced Planning and Scheduling Software (APS) allows manufacturers to have thorough insight into their manufacturing operation with ease and aid areas that are in need of it such as waste, profit, cost, and more. Utilizing an Advanced Planning and Scheduling Software (APS) can easily boost performance within your manufacturing operation and allow you to take your operation to the next level in terms of efficiency.
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: Demand Forecasting