What are the best tools and techniques for forecasting demand and planning production schedules?

1 Qualitative and quantitative methods

There are two main types of methods for forecasting demand: qualitative and quantitative. Qualitative methods rely on human judgment, intuition, and experience, such as surveys, focus groups, expert opinions, and market research. Quantitative methods use mathematical models, statistical techniques, and historical data, such as trend analysis, regression analysis, time series analysis, and simulation. Both types of methods have their advantages and limitations, and you should choose the one that suits your situation, data availability, and accuracy requirements. You can also combine them to get a more comprehensive and balanced forecast.

2 Aggregate and disaggregate planning

Once you have a forecast of demand, you need to plan your production schedule accordingly. There are two levels of planning: aggregate and disaggregate. Aggregate planning involves determining the overall level of output, inventory, and capacity for a medium-term horizon, usually 3 to 18 months. Disaggregate planning involves breaking down the aggregate plan into more detailed and specific plans for shorter-term horizons, usually weeks or days. Aggregate planning helps you align your production with your strategic objectives, while disaggregate planning helps you coordinate your operational activities and resources.

3 Heuristic and optimization techniques

To solve the planning problems at both levels, you can use different techniques: heuristic and optimization. Heuristic techniques are simple, intuitive, and easy to implement, but they may not guarantee the optimal solution. They include rules of thumb, trial and error, and priority rules. Optimization techniques are more sophisticated, rigorous, and complex, but they can find the optimal solution or a close approximation. They include linear programming, mixed-integer programming, and genetic algorithms. Depending on your problem size, complexity, and constraints, you can choose the technique that best fits your needs and capabilities.

4 Demand-driven and lean approaches

Another way to improve your forecasting and planning performance is to adopt demand-driven and lean approaches. Demand-driven approaches focus on responding to the actual customer demand rather than the forecasted demand, by using pull systems, postponement strategies, and flexible production. Lean approaches focus on eliminating waste and improving efficiency in your production processes, by using just-in-time, kanban, kaizen, and continuous improvement. These approaches can help you reduce lead time, inventory, costs, and variability in your production system, and increase quality, customer satisfaction, and profitability.

5 Software and automation tools

Finally, you can leverage software and automation tools to support your forecasting and planning activities. There are many software applications and platforms that can help you collect, analyze, and visualize data, apply different methods and techniques, and generate forecasts and plans. Some examples are Excel, MRP, ERP, APS, and BI. Automation tools can help you automate some of the tasks and processes involved in forecasting and planning, such as data entry, calculation, reporting, and scheduling. Some examples are RPA, AI, ML, and IoT. These tools can help you save time, improve accuracy, enhance collaboration, and facilitate decision making.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?