Tuesday, February 11, 2014
Forecasting & Supply Chain Management – The road ahead!
The journey becomes easy, when you know where and how to reach your destination. Consumer’s need and demands have always ruled the markets the world over. An organization in order to make a good business and to make sure that the business continues without any interruption must master the art of Forecasting. Organizations are willing to spend premium in hiring professionals who forecast. So, now what is this forecasting and what is the need behind emphasizing its importance?
As the name makes it quite simple and easy to understand, the process of analyzing and determining the trend of the market and to make predictions about the requirements and demands in the future is coined as Forecasting. It is imperative for an organization to be ready for to meet the future business demands and needs beforehand. I know it just sound so simple! Isn’t it? But take my words, it is NOT.
The canvas is just so big, that it is almost impossible to forecast the exact future trends. And it might be interesting to note that the forecasts are taken granted to be, “wrong”! But having said that, what professionals constantly strive for is that the “Near Perfect” Forecasts. A forecast which even if not correct, is close enough. And the closer, the better prepared one is to meet the business needs. It’s a method organization follow to avoid being caught off guard.
With this view in mind what a forecast analyst should keep in mind while doing the forecast? The answer includes but is not limited to – local geographical needs, customer’s demands and desires, market economy, purchasing capacity of the consumer, the need of improvement, availability of the raw material, distribution network and the list goes on and on and on!!!!
Now the question arrives, what are the areas where we can specifically see the results of the Forecasting? And again, there is no single answer. Anything that one can think off about the market, consumers and market trends and management of the organization, comes under the umbrella of forecasting. Let us see a few of them one by one!
Consumer demand/sentiment: It is imperative for a company to know what actually its customers wish. What do they feel about their products and where do they feel that the product need to be improved. At the same time, this helps the company to increase the customer base. The company might look to launch products to cater different class of customers. This helps the company to plan in advance how the preferences of customers would change over the coming future. And should the company pad itself up to face them. What new has to be done to attract the customer?
Logistics/ Warehousing: A detailed study of market trends helps the companies manage their logistics better. It can help reduce the expenses incurred on transportation, storage and distribution. The company can arrange in advance the warehouses and transportation facilities to avoid last moment fuss. This also means that the products are available and the supply of the product is regulated properly. This can also help companies determine to prioritize their action. Geo-Priority is a major factor in the supply chain management. This requires that the companies decide where and what they should deal first. Some geographic locations has some specific requirements to be considered. Ignoring these factors can be devastating for companies. The products that require immediate attention must be dealt first.
Production Planning: if the company know how many units (quantity) of products would be required for a particular duration, they can make themselves prepared to meet the market demand. This in turn can benefit the company in terms of better revenues and strong customer base. At the same time it allows the companies to negotiate better and efficiently with their suppliers and vendors. If the company has a clear idea of how much raw materials/spares would be required to meet the expected demand in the future, they can get into the process of negotiating and zero into the best options that are there at the time. And this gives a much better Bargaining capacity to companies bringing the costs of production down. This can help avoid if there is any price rise/inflation expected in the near future.
Make hay when the sun shines! Right things done at the right time decide whether the growth curves of the company’s balance sheet shoots up or dips!!!!! The operations managers here have a very critical at this level as their estimations and forecasts can greatly affect the company’s growth or decline.
(Ref. : General information available on public domain, Internet)