The Franklin Fan Company experiences significant problems with finding an effective forecasting technique. This issue is essential because it makes it impossible for the business to meet the customers’ needs. It often results in the fact that long-time clients complain of late shipments.
This information demonstrates that a practical option is to consider using an alternative forecasting technique. The given business brief will comment on the existing forecasting system being used by the Franklin Fan Company, suggest some improvement to the approach, and offer a new forecast for each month of the next year.
The case study under analysis shows that the Franklin Fan Company uses ineffective planning. It is so because the Production and Purchasing Managers report that they tend to reduce the demand figures that the Marketing Manager gives to them by 10% to generate their production schedule. Simultaneously, it is worth noting that the predicted demand also fails to reflect the real state of affairs in the market.
The Marketing Manager, Ron Adams, explains that higher figures are used to prepare for an upcoming demand increase that is likely to occur in a month. Thus, it is reasonable to mention that Adams consults external managers and uses past data to forecast the demand. According to Rheude (2020), this approach can be called the Delphi technique that focuses on expert opinions. Even though the given method can result in some advantages, the Franklin Fan Company does not meet any benefits because the forecast data are challenging, and the company fails to follow them.
The information above demonstrates that the company requires some improvements. Firstly, it is reasonable to ensure that a forecasting technique focuses on customers. Since the company has many long-lasting clients, it is appropriate to organize a survey to contact them and identify their planned demand (Sardarni, n.d.). Secondly, it is also necessary to focus on previous information regarding the company’s performance.
It refers to the fact that the Production and Purchasing Managers decreased the proposed demand by 10%, and they typically coped with meeting the demand except for the end of the year. This information means that the Marketing Manager’s actions to prepare for the increased demand are only justified for the last months of the year. Thus, it is possible to use these data to offer a forecast for window fans for 2015, and Appendix A mentions the predicted demand. The first nine months’ figures are reduced by approximately 10% to avoid excessive inventory, while the final three indicators remain unchanged to ensure that the company can meet the customers’ needs.
In conclusion, the given business brief has demonstrated that the Franklin Fan Company currently has significant problems with its demand forecasting technique. On the one hand, it refers to the fact that its Marketing Manager only focuses on expert commentaries to make predictions. On the other hand, the absence of formal planning allows the Production and Purchasing Managers to introduce changes to the proposed demand, which results in problems.
Thus, it is necessary to address these two issues to improve the situation. Firstly, it is essential to consider the Production and Purchasing Managers’ attitudes and include them in demand forecasting. Secondly, a useful option is to organize a customer survey to predict future demand. This effective forecasting technique will result in the fact that the customers’ demand will be met and that the company will avoid dealing with over or understock.
References
Rheude, J. (2020). Demand forecasting: Types, methods, and examples. Red Stag Fulfillment. Web.
Sardarni, D. (n.d.). Top 3 techniques of demand forecasting | products | economics. Economic Discussion. Web.
Appendix A
Window Fan Demand Forecast