PLANNING AND FORECASTING
A Functional Overview of Demand: Planning and Forecasting
Joi Ann Mobley Akins
University of North Carolina at Pembroke
MGT 4420 – 800
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A Functional Overview of Demand: Planning and Forecasting
Demand planning is a vision of demand used as a function of management to construct
the strategy to achieve the long-term goals of the firm. Demand planning is performed by
reviewing current and past market data to set a map to make strategic decisions. These
decisions can vary from increasing production or service levels to introducing new hires or
introducing new product lines. Planning decisions occur at a strategic level to create future
projections, and so are not readily changed once enacted. Demand planning can be observed at
many capacities such as planning for the level of human interaction during the holidays or
deciding which hole you want to dig yourself out of by skipping assignments.
Forecasting is a technique used at the tactical level access demand in smaller time
segments such as quarters or years. A firm can perform this function through data analysis or
by arithmetic means. Demand can vary based on a number of factors such as seasonality,
consumer trends, promotions and market health; and it is these factors that will aid in deciding
best practices in reviewing the data to formulate a forecast. There are several forecasting
models, some qualitative others quantitative any of which can be wrong, and more likely so due
to the length of said forecast. The strategy for forecasting can be visualized by first measuring
variability of demand to decide the proper forecasting model. Qualitative methods use easily
performed methods like creating surveys or performing market research on existing products.
These methods are made of best use in examining new to market products when there is little
to no quantitative data presently available. These methods are best used on features such as
parts products or services that have an abundance of available quantitative data. Forecasting
methods utilized for stable demand include time series model used for mature items and
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modified and weighted averages best used with a decent supply of observable data. Methods
used for variable demand are exponential smoothing and the Holt-Winter model.
For the purposes of this report both demand planning and forecasting are seen as
partnered functions used by a firm. In this context demand forecasting can be seen as a tool
used to make effective use of the firm’s available resources to plan and achieve operational
goals. As it progresses the narrative of this work will visualize my personal interaction with
demand planning and forecasting as it is utilized in the graphic design industry.
Goals
Supply chain management is cyclical in nature as we bear in mind that, theoretically, if
the firm sets a goal to maximize profits the cycle should follow the steps to assess the available
data, generate a forecast, formulate a plan, and enact said plan. These steps should work
together to create “a synchronized and responsive flow of materials information funds
processes and services” (Chen, 2010). Demand planning in the sign industry takes place in a
highly variable environment majorly affected by consumer trends, seasonality, and often
random events, like inclement weather. Planning failures are experienced similarly to those
expressed in Hauke and Meyer’s article which were deemed, “costly due to expensive
manufacturing processes, time-consuming capacity extensions and the risk of not fulfilling
critical customer demand.
In the sign industry there are various seasons that will affect the demand for signage.
High demand periods are typically brought on by tournament season, holiday season, and
municipal events. In planning for these periods, managers will order supplies at greater
volumes than during times of decreased demand. At all production levels all players understand
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the times necessary to complete their parts. This professional knowledge minimizes the need to
hire additional help and the high production volume is managed by working longer hours and
often on days we are typically closed. With our team's high level of communication, we can
mitigate planning failures by keeping ahead of any proposed deadlines.
Global Supply Chain
We will not implement a global supply chain management strategy. Whether demand is
high or low in this industry there are no positives to implementing a global supply chain. There
are a large selection of domestic suppliers and vendors for us to utilize and implementing an
international supplier would result in the addition of unnecessary time constraints with no
access to technical support or maintenance. With our business model aimed at a quick
turnaround, the constraints of adding global players to our supply chain would diminish our
reputation in the local sign market.
Suppliers and Vendors
In our industry we use reliable domestic vendors, a few of which are in the same state.
Our primary vendor is Southeastern Sign Supply, they offer quality supplies at competitive
prices and deliver twice a week while communicating with us every other day to make sure that
we have all necessary supplies. Supplies we acquire from this vendor are digital vinyl and
laminate, substrates, eco-solvent ink, and various other solutions. We also use Gemini which is
a domestic manufacturer of brass, acrylic, and metal signage. Turnaround for projects using this
vendor typically lasts about two weeks to a month, which is industry standard. We recently
acquired a new vendor as a metal fabrication company has opened directly across the street
from us. Management already has a personal relationship with the owners of this
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establishment and so it took minimal effort to establish a working supply chain relationship.
Previously for all metal fabrication needs, we would use a company called Glantz, wake me
often will reach out to request information on pricing for a particular project.
Shortages
As previously mentioned, our communication level at this firm is relatively high, and
with these open pathways we can communicate what we need to complete each project.
Although this may be true, there are still times where we have an error in communication, and
they miss our shipment. For example, we recently had a stock out with a particular ink color,
and we were able to mitigate any potential project damages by observing ink consumption data
and moving the production of the projects that relied heavily on that color to after the
shipment will come in. The firm in reference, Joe Signs, is a small three-person sign company
and despite our size we function at a high production level. We can avoid hiring new employees
by utilizing our personal relationships for additional help as needed.
Supply Chain Expansion
We will not be adding any additional suppliers or vendors at this time. We currently
have a vendor for all regularly needed materials, and even some that we do not use regularly.
In the case that we do need to add another link to the chain, supply chain managers will
diligently search for suppliers that will maintain any profit margins that have been set while also
meeting quality requirements.
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References
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product-in-use data in aftermarket demand planning. International Journal of Physical
Distribution & Logistics Management, 48(5), 524–544. https://doi.org/10.1108/IJPDLM01-2018-0025
Chen, A., & Blue, J. (2010). Performance analysis of demand planning approaches for
aggregating, forecasting and disaggregating interrelated demands. International Journal
of Production Economics, 128(2), 586–602. https://doi.org/10.1016/j.ijpe.2010.07.006
Hauke, J., Lorscheid, I., & Meyer, M. (2018). Individuals and their interactions in demand
planning processes: an agent-based, computational testbed. International Journal of
Production Research, 56(13), 4644–4658.
https://doi.org/10.1080/00207543.2017.1377356
Walters, J., Basson, L. M., & Kilbourn, P. J. (2019). Forecast accuracy in demand planning : a
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