If you have ever worked in a business setting, you have probably heard people talk about forecasting. No, we are not talking about the weather, but instead the projected sales or amount of business transactions expected to help prepare a business for the future. Many businesses focus quite a bit in the area of forecasting, by looking at preceding seasonal trends, data, and discussing overall knowledge and judgment. This can actually be a long and quite tedious process. However, is it really as important as it is made out to be? Do future trends always mimic past trends? Who’s to say that forecasting in business is any more reliable than forecasting the weather? Should big decisions regarding inventory levels really be made based on such inconclusive grounds? There are a lot of questions that go along with forecasting, however, business still engage in the practice of doing so. If your business is already lean or moving towards operating as a lean organization, do you think the practice of forecasting would agree or disagree with the concepts of lean? If you said disagree, you are correct.
Forecasting and Lean Manufacturing Usually Don’t Mix
The concept of lean really focuses on eliminating waste on all levels, whether it is wasted time, wasted money, or wasted resources. So a true lean company would never want to create more inventory than may be in demand because that would be considered “waste.” The lean mindset is actually quite simple, if a company has fully embraced lean, and all things were running according to plan a lean company would wait for an order, then once the order is received, create the products ordered and then respond to the next order in the same fashion. In lean, the goal is to not have fully stocked warehouse shelves filled with inventory that may never be sold or utilized. It is all about saving resources and being as efficient and effective as possible. Now with this in mind, I am not saying that forecasting is the worst thing a company can do, nor am I saying that it should be done. Instead, I would just like to point out that forecasting should not be the driving force behind creating inventory, especially if your company is practicing the concept of lean. In lean, the use of forecasting is just not feasible for anticipating business projections.
When Might Forecasting Be Helpful?
Believe it or not, forecasting can be helpful in some limited situations. Forecasting may help a company determine when expected high or low times may be arising, or even for the purpose of marketing to know when the good times to advertise are versus the not so good times, which is extra important if your business specializes in anything of a seasonal nature.
In the end, it is best to leave the forecasting to the weather professionals, especially when it comes to determining inventory levels. You don’t want to prepare for a huge storm of action when it ends up to only be a sprinkle of interest, you will only be left with wasted time, money, and resources.
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