Question

How does proper forecasting for manufacturing of a product aid the business in meeting demand of that product? In your answer discuss how season trends and cyclical products are impacted with these manufacturing decisions.

Answer 1

The role of demand forecasting is very essential to the Company in Supply chain management for manufacturing of a product to aid the business in meeting demand of that product. It facilitates the Company to estimate the probable demand of a Product in a given industry including that of the current demand and what could be projected in the days ahead. Proper Demand forecasting therefore helps in determining the level of production that is needed to meet the demand of the product.

Seasonal and cyclical products are highly impacted with these forecasting decisions. There are certain products that cannot be manufactured consistently round the year owing to the highly fluctuating demand for the same. In certain seasons, for example, the demand for umbrellas, rain coats and gumboots could be more prominent than that of the other. In such cases, it is essential to forecast the demand for the same and accordingly, start manufacturing the products much in advance so that it reaches to the markets on time to tap the demand more efficiently by the Firm. It is also essential to keep a close track on the changing season’s trends especially in case of Fashion industry etc, because certain trends are Fad. Those are extreme volatile in nature. It may be there in the market for a sojourn period. Attempting to grab such a demand is rather very challenging because of this. When forecasting of such a demand is done, it is to be ensured that the maximum potential of the demand for the same is achieved at a short period of time and accordingly, the manufacturing process should answer the activity, thereby in turn aiding the business in meeting the demand of the product by timely intervention in the market.

Also, it is to be noted that it is hence based upon the Forecasting that various crucial decisions could be undertaken such as the distribution of supply chain could be intensive or selective or exclusive, depending upon the Market segmentation and accordingly, manufacturing could meet the demands. For example, Intensive distribution is aimed at maximum market coverage; selective distribution is aimed at making the product available to selected dealers or retailers only in a given territory while an exclusive distribution is most restrictive form of market coverage. Based upon the category of classifications, forecasting would further help in tapping the future audiences as its target market. Forecasting is also required to help the Production and Sales team meet the anticipated demand in more efficient way. In addition, forecasting also aids in Logistics network. If certain exigencies, whether manmade or natural is forecasted, then accordingly, logistics and distribution could be altered such that it helps ensuring uninterrupted supply of the products to its customers.