The Supply Chan Lab » S&OP

10 principles of forecasting

Tielman Nieuwoudt — Wed, 22 Apr 2009 18:49:12 +0000

Forecasting is mostly wrong. Keep track of forecasting errors and methods. Errors are likely to occur, so make adequate provisions. Forecasting is more accurate for product groups than individual items.
Forecasting focuses on a time series. Determine the time series and evaluate the suitability of the time series against the objective of the forecasting.
Qualitative and Quantitative information. Evaluate both types of information and select the appropriate method(s). Present forecasting in different scenarios.
Weighted data. More reliable and relevant data should be weighted more heavily.
Forecasting should be independent. This will limit groupthink and promote independent thinking.
Unbiased individual input. Ask unbiased individuals to evaluate the forecasting process and output.
Keep it simple. Try to keep methods simple. Test employee understanding of the methods.
Record demand influencers. Record all events that might influence demand, such as floods and sales promotions. Describe all data assumptions.
Remove uncharacteristic events. Remove events from the baseline data, such as strikes and sales events, that are very unlikely to occur frequently.
Ensure data consistency. When recording time series, ensure consistency in data collection methods. Make sure information is reliable and check sources.

Material Requirements Planning

Tielman Nieuwoudt — Mon, 21 Apr 2008 14:42:10 +0000

Material Requirements Planning helps companies control quantities of materials they purchase, plan production quantities and ensure that they are able to meet current and future customer demand, all at the lowest possible cost. Here are some key questions to ask.

The production plan

Tielman Nieuwoudt — Wed, 09 Jan 2008 17:03:16 +0000

The production plan or master production schedule (MPS) means different things to different departments and individuals:

Sales department- a commitment from the production department to have the required SKUs

Customer- No out of stocks (OOS) and improved availability

Production department- a commitment for the sales department and good equipment utilization

Finance department- low stock holding and improved cash flow

Human resource department- labour efficiency and productivity

Senior management- a commitment from all departments to adhere to the plan