Supply Chain Forecasting in Manufacturing

Warehousing costs can be an excessive expense to your organization if supply forecasting is significantly over estimated, because it can lead to excessive expenditure in warehousing inventory, labor, and wasted material. On the other hand, if demand forecasting is significantly underestimated, you risk the possibility of lack of inventory, which leads to lost sales and ultimately lost customers, because they will go elsewhere to secure what is needed. Poor forecasting include shortcomings in such things as over or under stock of a specific apparel size.
Maintaining accurate inventory is necessary in order to prepare for demand. You must take into account respond to other retailer’s actions, and consider your own competitive market share in relations to your own organization.

Proper allocation of stock entails estimating the quantity of goods or service that the public will demand. By using both scientific and non, such as historical data, test market information, along with quantitative methods, demand may be closely determined. In order to calculate demand-forecasting, warehouse managers use the average of percentage errors, which is the equal to the deviation of actual demand from forecasted demand. If the deviation is above 100%, then the forecast in inaccurate.

Forecasting is a combination of art and science and requires a keen sense of understanding of the market, economy, historical data, statistical analyses, and the law of diminishing returns. Excellent skills in such areas will help in the strategic planning of the organizaiton.