Forecast Errors
Volume I, Issue 4, December 8, 2014

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 Reduced by Loops Not MRP

Loops not MRP create a result which is a unique architecture that treats material flow as a series of interconnected loops instead of the MRP architecture of linear process. MRP starts with the finished goods planned demand and then extracts the bill of materials and sends schedules both to the plants and its suppliers. Any change in demand causes supplier to react which has an impact on the upstream value chain. Loops are independent, yet interconnected with each other. One loop is between the supplier and warehouse. This may have a long lead time and lot size can be in pallets. The next loop could be between the warehouse and supermarket locations in the plant.  The lead time could be one day and lot size could be boxes. The next loop may be between supermarket and assembly lines. The lead time could be hours and the lot size could be in small bin quantities. Read more here.

Forecast Errors Reduced in Medical Device Manufacturing with Kanban

Kanban is a type of scheduling system that can be used to help a manufacturer determine what to produce, when to produce it, and how much to produce for their customers and supply chain partners. A major medical device manufacturer transitioned from a traditional paper-based manual kanban system to a cloud-based ekanban system for the lean manufacturing of high quality, defect free, and low cost intravenous (IV) infusion, medication and supply dispensing, respiratory care, infection prevention, and surgical instruments. Forecast Errors were significantly reduced. Read more here.

Forecast Errors Due to Demand Volatility and Unreliable Suppliers

Struggling with demand volatility, unreliable suppliers and forecast based planning systems is a core challenge for manufacturers. Few technology solutions have deployed solutions in hundreds of plants, in a few dozen countries and interface with ten thousand suppliers. More importantly few can specifically demonstrate the hundreds of millions in savings by eliminating forecast errors. Read more here.

Forecast Errors Increase in Food Manufacturing as Batch Manufacturing Vanishes

Food Manufacturing reported that in the past, companies focused on batch-oriented manufacturing; today, it is more demand-oriented manufacturing. In the older model, it was easier to produce anywhere in the world, and through a distribution model, pump it directly into the market. That has changed to the extent where companies are not dealing with a limited set of SKUs. Now the use of SKUs is so huge and so wide in variety that it is impossible for a company to stock every part. Their overall lead time to their customers is dramatically coming down, which means carrying more inventory, or start producing as demand comes in. To do that requires a synchronized supply chain. The food manufacturing industry has experienced this change quite significantly. Read more here.

Move from forecast errors to demand driven accuracy:
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