The Waiting is the Hardest Part

Most of us are not in the forecasting business anymore. That luxury went out the window in 2009 along with orders, jobs, and rainy-day funds. So unless you are a meteorologist, you likely are living in the now.

But the process – even the skill – of forecasting still is of importance, especially in an industry in flux, like manufacturing is these days.

Manufacturing is changing, and it’s changing quickly. Manufacturers, however, have oftentimes been slow to react to the changing business environment. Even glacially slow.

But chances are if you survived the recession of ’09, you’ve already implemented change in your business. You’re probably leaner. You’re likely meaner. But now it’s time to get back to the business of making things.

Uncle Sam is coming out of recession, and the trickle-down effect is starting to occur. For example, Statistics Canada reported in March that stronger-than-expected demand for automotive-related exports and a low loonie helped push up manufacturing sales in January by 2.3 per cent to a record $53.1 billion. These are numbers we haven’t seen in six years.

Now is the time to start looking forward and stop looking backward.

So why is forecasting good for your business? There are a few big reasons:

1. Sales planning

When your sales team forecasts, they are planning their future (and the future income of the company). The forecast is the tool that identifies what customers to meet, how early and often they need to be met, and when the cash will start to arrive.

2. Demand estimating

The sales forecast also is a good place to get an estimate of demand because the sales staff probably is in the best position to hear about anticipated or confirmed demand spikes or drops.

3. Inventory and supply chain management

An accurate sales forecast will make it easier to manage inventory, avoiding overstocking material or running out of it. By better predicting demand (a byproduct of forecasting), you can gain better control of your entire supply chain, enabling a true pull ordering system (JIT).

You have many forecasting methods to choose from, so it’s important to pick the one that is right for your business situation. The only thing worse than having no forecast is having one that is inaccurate.

So, if your predictions are as crazy as Carnac’s, leave the prognostication act to Carson. Otherwise, start looking toward 2017 and beyond.