Question

With reference to practical examples discuss the role of IT in forecasting and demand management

Answer 1

Answer:

Demand Forecasting would definitely helps to optimize (Re Order Point) and manage levels of stock in hand (reducing ordering cost and inventory holding costs) for meeting further needs/requirement schedule to the production plant, project or customer needs and satisfaction of on-time deliveries.

First, we need to understand and determine that the demand is dependent or independent. Also, we need to consider the industry, which we are working or going to forecast the demand.

For Dependent Demand: we can understand it from the future production plan, project schedule requirements or customer requirement schedule where long term agreements are established with customers. However, we need to review and refine Re-Order Point / Inventory Levels by understanding the fluctuations in the consumption and/ or sales and changes in the supplier market.

For Independent Demand: we can maintain simple re-order point, minimum or maximum level of inventory strategies.

At least required master level education of supply chain and some level of practice experience in Supply Chain Management. Inventory Management, alone would not give the expected results without having knowledge and/ or experience on Sourcing of Products. Because, the trends in Supplier Market, often changes towards price and or supplier ability to meet customer requirements, based on governamental rules, regulations, country EXIM Policies, supplier operational and financial capabilities etc.

Conclusion: The Demand Forecasting based on previous consumption, sales data, average flow and fluctuations in a specific time period, at least one year of past data. Also, we need to consider the political stability where the products are sourcing from domestic or global market. However, we have to establish long term agreements with Suppliers for better management of inventory and sustainability of supply chain with less working capital.

Exemptions: The Demand Forecasting is exempted for Seasonable and Shelf life Products.

Systems: We must have one integrated ERP System which could helps to us maintain the graphical dashboards and simple reports on both Sourcing and Sales.