Logistics and Supply Chain Management, 6th Edition

Forecast for capacity, execute against demand

We have already made the point that in today’s volatile business environment it is much harder to achieve high levels of forecast accuracy for individual items. Whilst managers will always be seeking better forecasts, the fact is that as uncertainty increases it gets harder to run the business on the basis of forecasted demand at the SKU level. Instead the focus has to be on how the company can move from a forecast-driven to a demand-driven mentality. Basically what this means is that ways have to be found to make it possible to react to demand within the customer’s order cycle. Thus if the customer’s expectation is for a five-day lead-time from order to delivery, the goal is to be able to respond ...