Chp. 8 Outline
CHAP 8.
1) Forecasting- the process of predicting future events -important bc it drives all other business decisions (forecasting drives the plan, plan is made due to forecast) -poor forecasting can lead to loss of sales of increase costs. Leave company unprepared
forecasting is an ongoing process that is always changing as new information and data become available.
2) Planning- selecting actions in anticipation for the forecast.
1) scheduling existing resources- use resources in the most efficient way possible
2) determining future resource needs- see what resources are going to be needed
3) acquiring new resources- make advanced plans to acquire new resources
Confusion between forecasting and planning- 3) demand management (process of influencing demand)- companies have an effect in demand (i.e promotion, ads, cutting prices)
Demand management cannot occur without forecasting first. Then planning, then demand management.
-=Impact on org.
Plans at all levels of the organization, from the strategic level where long-range plans are made, to the tactical where day-to-day scheduling is made, are based on forecasting. Also, forecasting drives the decisions of every organizational function.
-=Impact on SCM
The forecast of demand is critical not only to the organization but to the entire supply chain, as it affects all the plans made by each company in the chain. When members of the supply chain make their forecasts independent of one another, they are only looking at the demand of their immediate buyer not the final customer in the chain. The consequences are a mismatch between supply and demand because each member oft he chain is working to fufill a different level of demand.
Can cause bullwhip effect
-==Principles of Forecasting-==
1) Forecasts are rarely perfect. A perfect forecast is rare as there are too many factors in the business environment that cannot be predicted with certainty. Forecasters know
1) Forecasting- the process of predicting future events -important bc it drives all other business decisions (forecasting drives the plan, plan is made due to forecast) -poor forecasting can lead to loss of sales of increase costs. Leave company unprepared
forecasting is an ongoing process that is always changing as new information and data become available.
2) Planning- selecting actions in anticipation for the forecast.
1) scheduling existing resources- use resources in the most efficient way possible
2) determining future resource needs- see what resources are going to be needed
3) acquiring new resources- make advanced plans to acquire new resources
Confusion between forecasting and planning- 3) demand management (process of influencing demand)- companies have an effect in demand (i.e promotion, ads, cutting prices)
Demand management cannot occur without forecasting first. Then planning, then demand management.
-=Impact on org.
Plans at all levels of the organization, from the strategic level where long-range plans are made, to the tactical where day-to-day scheduling is made, are based on forecasting. Also, forecasting drives the decisions of every organizational function.
-=Impact on SCM
The forecast of demand is critical not only to the organization but to the entire supply chain, as it affects all the plans made by each company in the chain. When members of the supply chain make their forecasts independent of one another, they are only looking at the demand of their immediate buyer not the final customer in the chain. The consequences are a mismatch between supply and demand because each member oft he chain is working to fufill a different level of demand.
Can cause bullwhip effect
-==Principles of Forecasting-==
1) Forecasts are rarely perfect. A perfect forecast is rare as there are too many factors in the business environment that cannot be predicted with certainty. Forecasters know