Forecast Errors
Volume 2, Issue 15, April 13, 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.
How to Succeed with Continuous Improvement
CEOs as well as division, middle, and other managers in manufacturing each recognize that time is a scarce commodity -- yet they are often resistant to implementing the one thing that is key to saving time and developing a culture of continuous improvement: asking employees to bring one improvement idea to recurring meetings. Joakim Ahlström has successfully helped dozens of organizations around the world such as Coca Cola, Volvo, Ericsson, and IKEA. His new book, How to Succeed with Continuous Improvement: A Primer for Becoming the Best in the World, examines the roadblocks that managers inadvertently create and the constructive ways (and reasons why) to replace them in order to achieve high company performance. Read more.
Forecast Errors in Tax Collection Similar to Manufacturing Sector
According to a new report from The Pew Charitable Trusts and the Nelson A. Rockefeller Institute of Government, Managing Volatile Tax Collections in State Revenue Forecasts, finds that rising volatility of tax collections has contributed to increases in the size and frequency of forecasting errors, and identifies specific steps that states can take to manage volatile revenue. “Some level of forecasting error is inevitable, but the impact of this error can be mitigated by a mix of effective policy solutions,” said Brenna Erford, who manages Pew’s state budget policy research. ”States can adopt evidence-based rainy day fund policies to address budget shortfalls arising from unforeseeable economic and fiscal circumstances that make forecasting revenue increasingly difficult.” The same paradigm exists for manufacturers. Read more.
Innovation and Manufacturing Labor
In a new Brookings’ paper, Innovation and Manufacturing Labor: A Value-Chain Perspective, scholars Kate Whitefoot and Walter Valdivia offer fresh insight into the manufacturing sector’s labor composition and trends by examining employment in manufacturing from a value chain perspective. Economic statistics miss the full picture when it comes to this important labor sector: current data do not include pre-production services to manufacturing such as research and development, design, or post-production services including repair and maintenance or sales. Yet, manufacturing firms invest heavily in these services because they are crucial to the success of their business. Read more.
Ways Manufacturers Capitalize on the Service Opportunity
The Boston Consulting Group recently noted that in the course of working with industrial goods companies, a set of ten identified levers have proven quite useful in building strong service businesses. Manufacturing companies can pull these levers to enhance service revenues and profits. Typically, a company that wants to increase service revenue must focus on levers that are different from those it would emphasize to boost profitability. A manufacturer whose service lines account for about one-tenth of total revenues, but more than one-third of its margin, should probably focus first on steps that will raise sales, whereas a company in the reverse situation should do the opposite. Read more.
Move from forecast errors to demand driven accuracy:
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