Forecasting Operations Management Managers Module 3 -

Forecasting

Operations Management Managers Module 3 - SLP Forecasting Consider organization selected previous SLP papers. Integrate concepts operations management principles 've studying module turn page paper addressing questions (remember references): 1) How forecasting carried organization ( level discussing)? 2) How relate product development services offers? 3) What difficulties organization faces coming accurate forecasts? Could improve forecasts methods? SLP Assignment Expectations: Research organization information find internet resources find .

Forecasting: Wal-Mart

Q1, How is forecasting carried out in your organization (be sure to specify the level you are discussing)

Wal-Mart has long made use of a forecasting technique called the Collaborative Forecasting and Replenishment (CFAR) initiative, designed to integrate its internal processes of forecasting likely supply and demand with the forecasts of its suppliers. Wal-Mart "provides each of its major suppliers with a profit-and-loss statement for the goods received from that supplier" (Darling & Semich 1996). Using Wal-Mart's data warehouse, suppliers can run complex queries, enabling them to match supply with demand very closely (Darling & Semich 1996). Instead of Wal-Mart and the supplier making independent forecasts, which might clash or be based upon incomplete information, the forecasting of both is seamlessly integrated. Wal-Mart also keeps extensive data upon customer buying patterns. Integrated forecasting between Wal-Mart and its suppliers mean that goods are less likely to be out-of-stock or overbought, enabling inventories to be fairly low yet still responsive to consumer demands. Forecasting and Wal-Mart's closely-knit supply chain thus enables the retailer to be agile and responses to changes in market conditions.

Q2. How does that relate to product development and services it offers?

For a retail organization, forecasting is essential to determine patterns of consumer spending and demand. Because Wal-Mart offers such a wide array of products, forecasting is especially important, to ensure that the types of goods and services it provides will suit the demands of its customers. Demand for different products may vary considerably, depending on the economic outlook. For example, the recent recession has meant a decrease in the demand for personal care items like clothing, which consumers tend to cut back on during hard times, and an increase in the demand for products such as food (Gregory 2009). Consumers are eating out less and buying more discount food in bulk at big box stores like Wal-Mart. Because the average income of a Wal-Mart consumer is relatively low, these consumers also tend to be more affected by the economy in their buying habits, as they spend a larger percentage of their income on basic goods and necessities.

Another important factor for a retailer is seasonality. Demand for goods and services can likewise vary considerably from season to season. Integrating knowledge of the past year's seasonal demand with knowledge about the current state of the economy is likewise enabled by forecasting.

Q3. What are the difficulties your organization faces most in coming up with accurate forecasts? Could they improve their forecasts by using different methods?