Operations Management: Sustainability and Supply Chain Management, Twelfth Edition

The Strategic Importance of Forecasting

Good forecasts are of critical importance in all aspects of a business: The forecast is the only estimate of demand until actual demand becomes known. Forecasts of demand therefore drive decisions in many areas. Let’s look at the impact of product demand forecast on three activities: (1) supply-chain management, (2) human resources, and (3) capacity.

Supply-Chain Management

Good supplier relations and the ensuing advantages in product innovation, cost, and speed to market depend on accurate forecasts. Here are just three examples:

• Apple has built an effective global system where it controls nearly every piece of the supply chain, from product design to retail store. With rapid communication and accurate ...