As technology advances, manufacturers can make improvements to their capabilities and improve their overall ability to operate more effectively. This includes forecasting - traditional forecasting tools are being made redundant as the use of ERP software with technologies including artificial intelligence, machine learning, and BI capabilities are taking the lead.
What is forecasting and why is it important to a manufacturer?
Forecasting is a means of predicting potential demand of your products. It is about collecting as much data as possible, turning that into insight, then determining the appropriate actions. The higher degree of accuracy that can be achieved, the better the forecasting method. When trying to predict sales, potential demand or even material usage the key to being able to accurately do this is dependent on the quality and quantity of data that you have at your disposal and the tools that are being used.
Being able to project forecasts accurately can result in an array of benefits to manufacturers, including reduced costs, reduced wasted products/materials and better utilisation of resources throughout the business, not to mention being able to align other areas of the business, such as inventory, accordingly.
How does ERP software provide highly accurate forecasting abilities?
Having large amounts of accurate data is vital to achieving accurate predictions. An ERP system allows manufacturing businesses to collect vast amounts of data which derives from typical everyday activities such as transactions, sales orders, customer services, production, and delivery. This data can be used to enhance the accuracy and reliability of projected forecasts.
With a manufacturing ERP software system, this data is captured and presented concisely, to aid forecasting. ERP software provides the ability to forecast many aspects throughout a business including sales, demand, material usage and resource utilisation.
You may be thinking, how does ERP software help a manufacturer to accurately predict and make useful forecasts? ERP software can work in conjunction with a combination of Artificial Intelligence, Machine Learning and Business Intelligence technology to deliver outstanding forecasting capabilities to manufacturing businesses of all sizes.
Artificial Intelligence (AI)
AI analyses trends and identifies patterns in historical data sets which allows manufacturers to highlight periods of peak or low demand for them to be able to prepare to meet such demand at a particular time. This is where the intelligence side comes into play as AI can then provide suggestions to the user operating the system as to how these periods of peak or low demand can be met. This may involve increasing production to a certain level to ensure that products are available to sell at that time or even to simply buy in enough stock to meet demand depending on the industry and specific requirements of the business.
By providing highly accurate forecasts, risks can be minimised to be able to streamline other areas of the business. As an example, you can significantly reduce the risk of wasted materials, costs and resources through accurately predicting a sales forecast for a coming period of time. Getting the forecast as accurate as possible means that manufacturers can produce or purchase the right volume of products or of materials needed with minimal amounts of waste to meet demand at the time, reducing the risk of buying in too much or too little which incurs further costs to the business and diminishes customer loyalty.
Machine learning can learn from past experiences when it comes to forecasting abilities and considers other factors which may not be apparent with traditional models like item substitution & supersession, seasonal adjustments, item characteristics and associated bell curves.
The use of machine learning has ultimately relinquished the need for traditional methods with machine learning being able to provide highly accurate predictions and forecasts while also being able to process vast amounts of data in a very short time which is particularly difficult when forecasting traditionally. This process is also automated which makes updates to data and changes instantaneous as new data enters the system, making the forecast highly accurate right up to the point in time when the forecast was started. This not only helps to provide better forecasts but also allows manufacturers to adapt to changes far quicker and with greater effect.
Business Intelligence Technology/Business Intelligence Reporting
BI (Business Intelligence) technology allows business data to be analysed and converted into visual form for the users of the system, making it easy to obtain value from big data. This can save staff days of time – traditional methods would require tracking down the required information from what could often be in different locations, and then compiling this into a report. With BI, this process is automatic and can be pre-determined to provide users with the most useful and valuable information relating to their job or task at the time using simple interfaces.
Being able to take data from all areas of the business and analyse it in one central location allows for better forecasting to be achieved. Business intelligence technology operates in real-time, always giving you the most up-to-date information. In addition, one of the most important parts of reporting is the clarity – non-technical readers need to be presented data in an easy-to-read way. Clear reports make it easier to forecast and allow action to be taken quickly.
How does accurate forecasting benefit manufacturers?
- Better supplier relations due to knowing how much you need to buy in/out or how much you will need to make.
- Better customer relations as orders are fulfilled and always have stock in – no delays.
- Improve order fulfilment and on time deliveries.
- Reduced costs throughout – no overspending, overusing materials, no need to waste stock which costs money.
- Better manufacturing/production flow management – due to knowing how much needs to be made to meet demand at the end of a period – so better use of resources, materials, and time.
So, does technology mark the end of traditional forecasting methods?
Yes, we believe it does. Traditional forecasting methods are being rapidly replaced by the latest technology and giving manufacturers greater accuracy in planning for their future. Achieving a greater degree of accuracy ensures materials, resources and money is better utilised and does not go to waste, meaning greater profit margins and a more streamlined production process.
Technology is enabling manufacturers to save vast amounts of time and resources when it comes to forecasting in areas such as material resources planning, sales forecasting and production. This is freeing up time within factories so that employees can utilise their time more effectively on tasks that matter.
Interested to find out how manufacturing software with AI, Machine Learning and BI could support your business?
At Syscom, we have worked with manufacturers for over 35 years. We offer ERP software solutions with artificial intelligence, machine learning and business intelligence reporting to support businesses with forecasting, plus all the other benefits this technology brings to a manufacturer. Find out more here.
If your systems are over five years old, it’s likely that this technology may not be available to you. How much could this technology and the decisions you make based on information affect your businesses future?
For a discussion about this in more details, get in touch with our team today on 01384 344 244, email firstname.lastname@example.org or submit a contact form below.