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Monthly Production PlanningThe Problem: Current Production Planning Forecasts Missing Six Sigma BenchmarksA manufacturer of industrial manufacturing process machinery and components undertook a Six Sigma analysis of its monthly production planning forecasts. They found that the forecast track record was missing the CFO's performance benchmarks. They relied on a monthly survey of regional sales managers to produce a bottom-up forecast. As a result of their analysis, they felt they could improve their accuracy by integrating more information about external market drivers. Our Approach: Practical Blend of Short-Term and Longer-Term Forecasting Methods Global Insight facilitated a Business Drivers Workshop focused on the demand drivers for each of eight product segments in each of the regional territories covered in their monthly production planning system. Since the regional managers were already producing forecasts, they had good insight in terms of the many special short-term factors that affect orders on a month-to-month basis. Global Insight applied this information with a structured model that handled both the random monthly fluctuations in demand and the fundamental demand drivers of changes in end-market indicators. The Answer: A Monthly Production Planning Tool With an updated forecast prepared each month, looking out three months, the management team had a more solid basis for making decisions about monthly production planning. As a side benefit, the tool was also used at key points in the year to generate longer-term strategic planning forecasts looking ahead eight quarters on a biannual basis. |
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