Forecast Errors
Volume 2, Issue 1, January 6, 2015
A forecast error is the difference between the actual and predicted value. The consequences are expensive inefficiencies that can be resolved with lean manufacturing technology.
Forecast Errors Rarely Solved by S&OP
Few sales and operations planning modules offer more exception-based planning, enabling organizations to focus on the product areas where they can realize the greatest return and eliminate forecasting errors. There are idiosyncrasies that require industry-specific functionality to plan and execute supply chain strategies faster and more effectively for achieving business growth. Visualization of complex business data at a glance, would allow users can quickly read, predict and react to information, make faster, more proactive business decisions, and achieve strategic objectives that maximize profit. “Business intelligence is a tool set that continues to evolve from backwards looking to predictive and proactive,” said Steve Banker, service director for supply chain management at ARC Advisory Group. “The greater the visibility into the supply chain, the easier it is for a company to make course corrections toward business success.” View video here.
Forecast Errors The Perils and Pitfalls of Lean Inventories
Robert J. Bowman shared in SupplyChainBrain that manufacturing and distribution executives love the idea of slashing inventories. Distribution-center managers must deal with the consequences. Lean is the watchword in supply-chain management today, and inventory is not immune. All that merchandise sitting around on warehouse racks seems like a prime candidate for cost-cutting. Most of the time, the practice makes sense. No one wants a lot of unneeded product dragging down the bottom line Unfortunately, distribution centers are not always involved in the high-level decision to cut inventories which leads to forecasting errors. Listen to the podcast here.
Forecast Errors Often Triggered by International Shipping Performance
Increased globalization of the supply chain is causing shipments to spend more time in the transport and logistics pipeline. Often overlooked is the link between costs and intercontinental shipping performance. The Aberdeen Group polled 142 shippers to explore the key events that industry leaders monitor for international shipments. The events industry leaders view as essential, how leaders move from raw data to intelligence, and the link between improved supply chain visibility and reduced costs prove vital in the elimination of forecast errors among global manufacturing enterprises. Read more here.
Forecast Errors Follow the WIP
Forrest W. Breyfogle III recently shared in Quality Magazine, “Five Techniques for Reducing Manufacturing WIP: Lean Six Sigma Project Opportunity.” He suggested reducing manufacturing work in process (WIP) leads to higher liquidity, better cash flow, enhanced customer service and diminished business risks. Large benefits can be gained when WIP is reduced significantly, focusing on raw materials as well as finished products. WIP reduction could be accomplished through execution of a Lean Six Sigma project. WIP can affect various areas in the manufacturing process, like labor productivity and line efficiency. This is especially important for bottlenecks in a manufacturing operation. Read more here.
Move from forecast errors to demand driven accuracy:
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