How Manufacturers Can Fix Broken Production Forecasting

Let’s see how manufacturers can fix broken production forecasting. You all might agree with me on this, if our daily habits for planning are outdated it will lead to various issues like – inefficiency, stress, and missed delivery commitments.

You can also go through a video playlist on ERP future trends for manufacturing to understand the role of ERP.

So, here is a story –

I once walked into a manufacturing plant in Delhi at around 7:45 am in the morning. There i saw a white planning board that was almost like a battle field map having half erased numbers, arrows, and sticky notes that were hanging by hope. The plant manager laughed quietly and said that each morning we plan and by evening we improvise.

This story is not an isolated incident but a part of a larger and more persistent patter and many manufacturing companies are still into using spreadsheets, and gut feeling for forecasting.

Traditionally, the typical flow in manufacturing plants goes like this – sales team will guess out the demand, production will then plan around it, procurement will react to late, store team will start scrambling, and the finance team will will have to deal along with surprises.

The plan initially looks to be neat and clean at 9:00 am in the morning but reality checks in by 3:00 pm. What i am trying to say is that the manufacturing forecasting usually fails because it’s more inclined towards disconnected departments and they believe in assumptions rather that real time data.

Why Does Forecasting Breakdown –

First of all, there is no unified data because it lives everywhere from multiple excel sheets to multiple teams and there is no single source of truth. And when the data is not centralize, there are delays and flaws in the decision making.

Secondly, teams might lag behind if they are persistent in using the excel culture. For sure excel is smart but we must also understand that it will not update on it’s own depending upon the live operations in a manufacturing unit or on the customer demand. We must understand that, excel sheets are okay to conceptualize or to make better understanding but we can not depend completely on them in a dynamic manufacturing environment.

Thirdly, it’s always late when we talk about the information or data. You see that reports are sent in weekly or monthly and when the decisions are taken they are on the old data. Hence, forecasting affects and it will fail due to the outdated information.

Fourthly, Knowledge is something that lives within a person and it can never reside within systems. For example, a senior is absent and then what follows is already understood. So, kind of a tribal culture will make your manufacturing operation’s processes dependent on people and not system.

Fifthly, there are times when the sales and production teams will start speaking different languages. This can be observed when the sales team is up for getting each and every deal but production team is looking for stability and then a delays come in that lead to firefighting. What you should understand is that when your sales and production planning are not integrated your forecasting shall fail.

Real-time forecasting through data driven planning

Now, in the current scenario most of the modern manufacturers have started winning as they have moved from their so called gut planning to data driven planning. So they are having –

Real time visibility into their actual inventory levels, orders, and production capacity. what this means is that they get an instant view that allows them to make faster decisions and last minute firefighting.

Demand driven planning allowing them to follow the actual demands without the need to plan on assumptions. So, as per the customer needs, now the plans are adjusting automatically thereby reducing overproduction and shortages.

End to end integrating between sales orders, production schedules, material planning, supplier timelines, and cash planning. Everything in their manufacturing operations is all connected together. All departments are using the same system so everyone stays aligned thereby reducing the delays.

Predictive intelligence helps the system to learn form – their historical demand patterns, supplier delays, seasonal shifts, and market signals. What this means for them is that their forecasting becomes proactive instead of being reactive based on their gut feelings.

Let’s see a shop floor example –

One plastic plant for each quarter was initially order ordering raw materials as they were thinking more on shortages. The overstocking turned their warehouse into a mini mountain of polymer bags. They implemented ERP with automated MRP and forecasting their stock levels dropped by almost 28 percent. And yet their order fulfillment improved.

So having better forecasting at hand you can reduce wastage improving reliability at the same time.

What will happens when you fix broken production forecasting

After you have fixed your forecasting, there will be a change that will be for good. Your production will be able to run smother, unsold goods will not pile up, precise planning will be there. Also, cash flow stabilizes, delivery commitments will be realistic, and customer trust will grow.

Where does ERP Fit Into Broken Production Forecasting

We can never improve our forecasting if we plan to hire more planners or buying a big whiteboard. We can achieve it through an accurate, real time connected information. ERP can provide you with – unified data, live inventory, automated MRP, sales integration, supplier planning, and production dashboards. So, what i am trying to say is that ERP will help in replacing guesswork with real time intelligence.

Why Odoo ERP Works for Modern Manufacturers

Manufacturers do not need technology. But one that adapts fast, helps them to scale smart and should not burn their budget. Odoo ERP provides them with – real time MRP, demand forecasting, live sales & inventory forecasting. Apart from that, automated replenishment, visual planning dashboards, and flexible modules as you grow. Odoo helps you with enterprise grade forecasting without the enterprise grade costing.

Manufacturing companies are not failing because their people are not working hard. But due to the fact that there is a delay in decisions due to outdated information.

Looking forward to fix broken production forecasting. Connect with us at sales@apagen.com or call us on +91 9971800665 and we will be more that happy to provide a solution for the same.