Feature Article
How Important Is Forecasting In Your Investment Foundry?
by Patrick McCrevan, B&L Information Systems
activity, maybe 20% more sales, but you wonder, which customers are increasing orders, what materials will you need, is it the same mix you’ve been buying, will it be available and how much do you need, should you make a long term buy? This feeling can lead to all kinds of problems in a manufacturing facility. What is needed is an accurate forecast of materials, labor, and operations. How do you go about producing this kind of accurate information? Well, many resort to Excel spreadsheets and creating their own formulas and analytics. What if there was a better way? Let’s begin with the idea you should
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have all the necessary data somewhere in your internal information systems. This is especially true if you are using a modern Enterprise Resource Planning (ERP) product. ERP systems are great at storing vast amounts of order, product, production, material, and labor information. Just the kind of information you need to put together a large-scale accurate forecast. However, organizing this data and adjusting it may not be that simple.
Some ERP systems have the
capability to grab all your historic information and allow you to specify a designated amount of increase or decrease in sales and weight volumes. That is not too hard to do if you can get the same data into Excel and plan it. However, highly capable ERP systems also have access to labor rates, material costs, operation rates, overhead rates, material recipes, all of which are crucial factors in making an accurate prediction based on a suggested sales volume increase. Additionally, these systems can then perform what is referred to as a forecast explosion. This is a process
42 ❘ July 2022 ®
ou’ve heard the stories and pronouncements before; the sales team is predicting a big increase in
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