Make-to-Stock (also sometimes referred to as Made-to-Stock or MTS) manufacturing hinges on accurate forecasting. Without it, companies will constantly overproduce items that take up space in storage and understock on the products that customers want now. Unbalanced inventory levels easily have the potential to take down MTS manufacturers, making it essential to precisely estimate demand with forecasting using an Enterprise Resource Planning (ERP) system. Here is how you can accurately forecast with an ERP.
Historical Data Visibility
Make-to-Stock manufacturing depends on historical data to support forecasting efforts. After all, the best way to anticipate a product’s demand in the future is to analyze how performed in the past. There are some other factors that impact forecasting as well (which we will get to shortly), but historical data analysis is one of the most important to consider. A modern ERP makes it simple to see product data from multiple perspectives. You can see how a product performed overall, look at individual customer’s order histories, and analyze the trends that impact sales at different points in time. In contrast, legacy ERP systems isolate data, making it nearly impossible to understand the complete picture of performance history. The right ERP offers MTS manufacturers the full data transparency they need to forecast. If your ERP is holding you back, talk to the ERP experts at Datix. We take a business-first approach with each of our clients to understand how their organization operates, so we can offer them a comprehensive solution. Maximize your outcomes with Datix.
Factors to Incorporate When Forecasting
Historical data isn’t the only factor that impacts product demand. Product life cycle is another key element to remember and there are other factors that are even less easy to predict. To forecast with an ERP accurately, you can utilize statistical demand forecasting principles in these four steps:
- Factor in product-specific factors, including your item’s historical data, demand type, and position in its product life cycle (read more on product life cycle)
- Identify if the item has seasonal demand patterns or market trends that impact it
- Refine your forecasting parameters to reflect volatility in the market (if the market is volatile, focus on shorter time periods for more accurate results and reforecast if a major market shift occurs)
- Allow for qualitative demand insights such as adjusting for promotions or competitor activity
When Make-to-Stock manufacturers accurately forecast, the benefits are huge. You can efficiently allocate resources and buy inventory in bulk for greater discounts, schedule work, labor and equipment maintenance accurately, and avoid the stress of rushed deliveries for understocked goods. If you are unsure how to account for all of these factors when forecasting, an ERP consultant can help. At Datix, we support our clients throughout their software journey and are with them every step of the way. From start to finish, Datix has your back.
MTS manufacturers can see immediate boosts in their bottom line when they transform their forecasting model or implement a new ERP. Don’t let outdated software hold your organization back from becoming an industry leader.
Read more on how ERP Systems Improve Make-to-Stock Manufacturing
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