Leitax Case Essay

The current demand forecasting method is based on qualitative techniques more than quantitative ones. If the forecast is not accurate, the company would carry both inventory and stock out costs. It might lose customers due to shortage of supply or carry additional holding costs due to excess production. If the actual demand doesn’t match the forecast ones, and the forecast was too high, this will result in high inventories, obsolescence, asset disposals, and increased carrying costs. When a forecast is too low, the customer resorts to a competitive product or retailer. A supplier could lose both sales and shelf space at that retail location forever if their predictions continue to be inaccurate. The tolerance level of the average consumer

We will continue to employ the 10% production over projection strategy to meet the increase in demand in most of our regions. However product availability levels last year if higher, still could have obtained larger market shares, in particular, in our North American market where there was a slight decline in market shares. This year, we expect those demand levels to decrease slightly, due to the exchange rates in the other regions and more competitive pricing from our

* Forecasting is an impartial strategic ingredient that will ensure apt base for reputable planning. Our forecast is always the first step in developing plans in running the business along with our future plans of growth strategies. With this tool, we are able to anticipate our sales within reason that then can allow for us to control our costs in conjunction with inventory which will then help us to enhance our customer service. Sales forecasting is a vital strategic tactic in our company’s methodology.

3. Market Share: forecasting will help in identifying the size of the market share and market potential will aid in the manufacturing and distribution process. Will also aid in proper utilization and eliminate waste.

However, from the case study, it is difficult to do so due to two main reasons which are insufficient information and long production’s lead time. Information would slowly become more obvious when it approaches the peak season while the long production’s lead time is a constraint which prevents the company from producing at the point where adequate data are available. Therefore, to improve company’s performance, the first thing is to forecast demand more accurately from the first beginning. Wally now only based his first phase production decision on individual forecasts. However, from the exhibit 5, it shows how demand forecasts improve with increasing information. With the lack of information, Wally might take into account and use past statistical deviation between initial and final forecast, which is the closest to the real demand, when he makes a decision. In textile and fashion industry where things change rapidly, people who have more experience and close to customers are those who are most likely to accurately foresee the future trends. So inviting retailers, especially salesmen or shop managers, to help with the demand forecasting is a good idea (Giordano also used this effective strategy to forecast demand).

* As stated in the guidelines, we also assume that the mean of the demand is equal to the product of the mean of the forecasting error and the forecast itself, and the same for the standard deviation of demand;

Along with better communication, improved forecasting can help a supply chain run better. If you are able to forecast customer demand, you have a better chance on not being “tricked” by signals throughout the chain. A company can improve forecasting by looking at their past history, the history within their industry, or simply by asking their customers; predominantly through surveys or focus groups. Another way to improve you supply chain is to see if there is an opportunity to reduce the number of parties or complexity within the supply chain. The more stations there are the better chance for errors and delays. It is also easier to find and solve issues if your process is less complex. A smaller group also allows for better relationships between

It is recommended that a deep analysis should be performed for the forecast errors in the previous years to identify similarities, patterns and trends that would collect certain items together under one forecast error distribution, instead of grouping all new items together. Distinguishing between forecasting for “never out” (Staples) vs. “new” items. In the case for “new” items, then histories of similar new products introduced by L.L. Bean can serve as historical guidelines to help derive a new product sales forecast. Market Research and Surveys: Finding new ways to get advanced market feedback on new products prior to launching, such as ending a survey to customers to find out their preferences among the products displayed. In return, offer

Fixing the forecasts allows to build the communication between the different departments of a firm (communication between the operational staff, the financial staff, etc.). It should be also a guide for financial planning and monitoring the activity and the performance. It is a tool to evaluate profitability and productivity, to identify an eventual gap between actuals and OP (operating plan), and to fix it.

Supply Chain Management : The vertical integration in the supply chain led them to achieve shorter time frame of release and also helped them to

The decision to introduce more sophisticated forecasting techniques to aid the demand planning process would not have worked well for Leitax.   The introduction of the system Fowler and McMillan introduced was a significant change for the staff of this company, thus trusting the system and improving the system for better accuracy would pay off more than confusing things by adding more sophisticated models.   Relying on the most robust model, the statistical model has proven successful in Leitax’s past, but Fowler was concerned the DMS group would seem over bearing. I think DMS had the ability to utilize statistical modeling while also bringing all stakeholders together in a manner that was cooperative versus over

The ecosystems that digital versus physical products have, including their supply chains are vastly different. These differences in their supply chains have a significant impact on the abilities each has to innovate. Digital products manufacturers are highly dependent on their supply chain, often creating shared collaboration

The mission of the Forecast Re-Design Team was to reduce expenses and risks associated with production and costs of procurement, inventory, quality control and technical infrastructure. According to Fowler, there were four objectives: "(1), to reduce inventory levels across the supply chain; (2) to increase velocity and accuracy of planning information throughout the supply chain; (3) to increase supply upside and downside flexibility; and (4) to improve on-time performance to customers.

All organizations that supply goods or services to another business or consumer look at demand forecasting for planning purposes. Young (2010) stated for most organizations, the marketing department will forecast the demand for both the short and long term planning and the operations department will work closely to set a production forecast based on these demands. When forecasting, organizations must take into consideration all the possible factors that will affect the supply/demand. These factors include trends, seasonality, competitive pricing, sudden changes in demand, economic conditions, labor and strikes, and more. In today’s business world, forecasting is not just a necessity, but also a means of survival, which is why predicting the future, is so important for the short and long-term success of an organization. As the northeast vice president of operations for McDonalds, I have the complex and challenging role of ensuring accurate forecast are submitted for the internal and external demand for our products.

More precise prediction indicates enhanced production assessments, and enhanced trade judgment stand for increasing revenue. A right sales estimation ought to be a forecasting of that will occur independent of what you believe will come about and nearly all, what you feel like to take place. Major expansion has been made in the function of numerical facts study to establish more correct sales predictions of upcoming market pattern. Such trading predictions give a separate, impassive vision of the marketplace. Good-quality sales prediction diminishes the ambiguity about the expectations, and fantastic sales predication exchange this doubts into likelihood.