The Answer is Easy…Better Forecasting

Image courtesy of Danilo Rizzuti / FreeDigitalPhotos.net

Image courtesy of Danilo Rizzuti / FreeDigitalPhotos.net

Have you ever sat in a meeting where the discussion is about the high (sometimes low) inventory levels?  Do you frequently hear the answer of, “Once we get our better forecasting tool in place our inventories will be better.”?

This is a strong sign the company has not fully embraced lean thinking.

A lean company would not even have a discussion where forecasting tools are the solution.  A lean company is closely connected to their customers.  The goal is to make one product when one product is bought by the customer.  I know this isn’t easy for all companies, but the discussion would be around how to move in this direction.  Not how a better forecast can be generated.

There is one thing I can guarantee about a forecast.  It is WRONG!

I have never heard anyone say, “Man, I nailed that forecast!  I hit it right on the nose!”

Don’t misunderstand me.  I do believe there is a use in looking forward and understand what is coming.  A company would like to understand if a peak or a valley of the product sales might be coming.  This can help set and adjust maximum kanban levels for that period of time.

A forecast is good to understand directionally where volumes are heading.  Forecasting is not a good basis for your entire inventory strategy.

It is a difficult mindset to change.  When you do and act on that new mindset, the dividends it pays are enormous.

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Posted on March 14, 2013, in Customer Focus, Principles, Tools, Waste and tagged , , , , , , . Bookmark the permalink. Leave a comment.

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