Supply Chain Management

Supply Chain Management - Forecasting

Supply Chain Management - Forecasting

Introduction

One of the major aspects of supply chain management is forecasting. Even though it is an imperfect science, but it is imperative for almost every business. While considering supply chain management, forecasting helps in ensuring future demand and supply, so that appropriate amount of materials can be stocked by the business to meet this forecasted demand (Stadtler, 2005, pp. 579). Underestimating the important of this aspect would result in an ineffective demand prediction, and may even lead to running out of supply which would eventually cause consumer dissatisfaction. However, forecasting isn't as easy as it sounds. An accurate forecast is almost impossible, though what organization seeks to achieve is as close to being accurate as possible. The challenges faced while forecasting are numerous. All of which account up to create imbalances which lead to the forecasting not being carried about correctly.

Discussion

Forecasting Accuracy

Forecasting accuracy is a measure to examine to effectiveness of the process. It seeks to study the comparison between the forecasted and the actual scenario. Since this demand forecasting forms the basis of the entire supply chain planning, thus it is an utterly imperative part. A forecast varies for different products. When considering mature products, it is rather easier to forecast their demand and hence it can be more accurate. This is became their demand usually follows a set pattern. However, products with uncertain demand patterns are usually difficult to forecast and the yielded results are mostly inaccurate. This is because its demand depend upon a wide array of factors, all of which account to make the forecast weak.

As mentioned earlier, forecasts are always wrong. Therefore, it is important that both the expected value of forecast and a forecasting error should always be incorporated in it. An aspect ...