Who is Bill Gaw?
And why should we
listen to him?


Lean Enterprise Articles
 

Your 3-Step, World Class, Lean Manufacturing Training Program
WCM Lean Manufacturing

 Increase the effectiveness of your
Lean Manufacturing Initiative

Manufacturing Simulation Game 

Quick Response Manufacturing
Part 2 of 5


privacy policy

Contact Us

 To review our training 
 packages, click on 
  the links below: 

e-Training Packages:

Lean Manufacturing
Solutions

Balanced Scorecard
Training

ISO 9000:2000
Training

Supply Chain
Management
Training

Operations
Management
Training

Strategic Planning
Training

     Other Options:   

Lean Leadership

Thinking Outside 
the Box Principles 

Lean Enterprise Training

Performance
Management Training

Lean Kaizen Event

Lean Manufacturing Implementation

Lean Six Sigma
Basics

Supply Chain
Management
Solutions

Strategic Planning
Model

Total Quality
Management
Training

Lean Manufacturing Coach and Certification

Production Planning and Control
Solutions

Manufacturing Planning and
Control

Forecasting Systems

The projection of demand, to cover the cumulative planning lead time that is not covered by (firm) customer orders, is the role of the forecast, be it manual or computer based. Forecasting has always been the most difficult application to implement effectively, even in those businesses not impacted by fashion, taste or seasonal variations. The traditional statistical intrinsic forecast required modifica­tion by judgmental and extrinsic factors, or models that allowed for the external factors. It is shortcomings in these areas that usually degraded forecast effectiveness.

Today, product variety, choice, fashion, new retailing chan­nels, promotions and impact of competition have "de­stabilized" the forecast. The influence of extremely large retailers, and their requirement for compliance in a partnership, have invalidated much of the forecasting logic of the 1970's. Today, a forecast has to be more customer oriented (i.e., multiple projections of the same SKU or group by customer). Extrinsic models and parameters must be more easily assimilated, and directly managed. In some cases, the best forecast is to take the projected sales plan (i.e., buyer's forecast) directly into the manufacturer's planning and control system. More emphasis must be given to monitoring, and modifying the projection, on an ongoing basis.

Customer Orders

The typical order entry/control system is based on firm or confirmed orders for discrete dates/quantities of a specific product, either as individual orders or releases against a blanket order or contract. There is a need to change such systems, to allow additional types of order that can reflect the information from a partnership, and afford the manu­facturer a valid information base of demand by customer. These additional types of orders could be described as the following:

• Unconfirmed/projected orders for a specific product/ SKU
• Confirmed order of a product group (e.g. style) that will be later amplified by specific identification of variants (e.g. color, pattern, width, size)
• Unconfirmed/projected orders for a product group (e.g., style)
• Sample or demonstration orders that are not part of true (retail) demand.

Note that unconfirmed orders need to be consumed by the discrete confirmed orders, just like a traditional forecast. The objective is to provide a combination order/forecast that not only reserves capacity, but also assists the user by being easier to convert into a normal order.

Customer Order Feasibility

Even with a forecast in place, or with projected orders as described above, the sales department is often required to commit to delivery promises while on the phone. The representatives do not have the time to confer with the manufacturing managers involved with the master sched­ule. The traditional "available to promise" information, typically by product group, is of only limited value in such cases. It is usually periodic, forecast based, and therefore out of date in most situations.

Also, it may not have considered the key resource or material constraints involved in the final definition of product or variant (e.g., dyeing/finishing/printing in tex­tiles, color/size in apparel).

Modern computer systems can do better. Entry of customer request date/quantity, explosion against key resources or materials, comparison with up to the minute capacity or material availability can be performed interactively, while still on the phone. Simulation of suggestions for alterna­tives can also be provided, and negotiated with the customer. Responsiveness is achieved, the customer is satis­fied, and manufacturing schedules have not been impacted by the misguided guesses of the sales person. In other words, we employ the resource requirements planning techniques of classical master scheduling on an order by order and cumulative basis.

To Be Continued


STAY CONNECTED

To stay current on manufacturing competitive knowledge, please subscribe to our weekly bulletin, "Manufacturing. Basics and Best Practices (MBBP)."  Simply fill in the below form and click on the " subscribe button." 

We'll also send you our Special Report, "8-Basics of Kaizen Based Lean Manufacturing."  

All at no cost of course. 

First Name:
Your E-Mail:

 Your personal information will never 
be disclosed to any third party.

privacy policy

Here's what one of our subscribers said about the MBBP Bulletin:

"Great articles. Thanks for the insights. I often share portions of your articles with my staff and they too enjoy them and fine aspects where they can integrate points into their individual areas of responsibilities. Thanks again."

               Kerry B. Stephenson. President. KALCO Lighting, LLC


"Back to Basics" Training for anyone ... anywhere ... anytime

Business Basics, LLC
6003 Dassia Way, Oceanside, CA 92056
West Coast: 760-945-5596
 

© 2001-2007 Business Basics, LLC