Individual and Company Success, Come Discover the
This presentation will explore the significant potential impact of a
well planned and carefully executed forecasting process on the
ability of Manufacturing to serve the customer. It will show why
the Manufacturing Planning Process is critical to the maintenance of
this capability, and how the forecast is critical to this process.
The target audience for this presentation is the user of the
forecast more than the people who are the "experts" preparing the
Why we must avoid overreliance on quantitative methods and the need for using appropriate qualitative methods are emphasized. The concept of "Cost of Forecast Error" is introduced. Given that forecasts are either "wrong" or "lucky," and that forecasts are more accurate over a shorter horizon, the benefit of improving response to actual demand, as received from the customer, is a critical element of a successful manufacturing plan.
Much has been written and spoken about forecasting. A basic truism,
in my opinion, is:
There is a direct correlation between the quality of the planning and the results of the execution. Good plans poorly executed will have poor results. Poor plans well executed will have poor results. Only good plans well executed will yield the quality results we must have for effective execution. The marketing forecast is a key element of having a good plan. In fact, all PLANS start with a FORECAST.
Sayings pertinent to forecasting, range from:
Why Do We Forecast?
Successful companies have good practices in defining their Strategic
Intent (their vision) and converting that intent to a Strategic
Plan. A key to going from intent (vision) to plan is the marketing
forecast. Peter Drucker has written:
Another way to look at the purpose of strategic planning, and therefore the purpose of forecasting, is to make plans and decisions to "INFLUENCE THE FUTURE FAVORABLY."
While a key measure of a company's success will be the bottom line, a key factor to maintaining and improving the bottom line is the ability to satisfy the customers' needs and expectations. Therefore the forecast must go beyond the finance driven factors of dollars and volume. To satisfy the manufacturing needs we must include product mix, demand patterns and effect of present and anticipated competitive pressure.
To get a fuller understanding of the impact of forecasting on the business (Sales and Operations) Plan, let us examine the key issues dealt with in the business plan:
• How do products, markets rank now?
The answers to why we forecast are:
1. To anticipate the future
To be Continued
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