Forecasting in production management

The activity of production and operational management is performed in 2 main stages, of which the planning is the first. The initial stage here is the planning activity forecasting, often defined as the art and science of predicting future events.

Planning is associated with determining future, desired conditions and in practice, these are the planned goals, because only with a pre-set goal and only with a preliminary forecast can seek some meaning and direction.

On the other hand, forecasting is a starting point in planning and, more importantly, is research to predict the future. In general, the objects of forecasting are the changes that may occur in the manufacturing plant and its environment and, as should be taken into account when making planning decisions.

Forecasting is ahead of planned activities and gives an idea of ​​the great variety and variety of types, approaches, and techniques for forecasting applied in practice. Thus, for production management, different types of forecasts can be useful, which should be grouped by appropriate characteristics:

Depending on the aspect of the forecast, economic, demographic, social, technological, etc. forecasts are possible;

According to the time horizon, they are subdivided into – long-term (over 2 years), medium-term (from 3 months to 2 years), short-term (up to 3 months);

According to the device used, the forecasting methods are – qualitative and quantitative. Qualitative methods are used when in some cases there is no information about the periods or events in question. In this case, they are suitable for making the necessary forecasts, which rely on the experience and evaluation of managers and experts.

The most commonly used methods are the 5: dialogue method – in this technique a group of managers is charged with developing forecasts. Here managers from marketing, production, innovation, etc. make decisions about future sales; Reference: “What is Product Innovation“,

The Delphi Method is a significantly more structured form of group consensus, as it uses external experts with expertise in forecasting. The purpose and essence of the method are related to obtaining agreed opinions from the subjective assessments of experts through anonymous surveys;

Market research – provides information for identifying marketing problems and successful opportunities of the enterprise, studying and evaluating the behavior of producers, drawing up plans for marketing of products, and more.

Scenario method – this method is described as a hypothetical sequence of events designed in a way that allows attention to be focused on a causal process with a tendency to make decisions. This method allows answering 2 questions: What can be the hypothetical situations in the development of the process step by step and what alternatives exist for the subject of each step to prevent, divert or facilitate the process.

Historical analogy – this method is a description of the future development of a system based on the relevant circumstances and behavior in its past. The main disadvantage of the method is that it cannot react to possible future changes in the business environment. The possibilities and the need for various forecasts in the production management must know and take into account in their practice the advantages and limitations arising from the different forecasting methods.

Typology and selection of production and operational processes.

The production process is a set of interrelated labor or natural transformation processes aimed at creating a particular product. According to the nature of the production processes over time, they are divided into:

  • interruptible
  • continuous.

Interruptible units produce separate, separate units of products or services. They are characterized by a certain duration in the time of impact on the materials and thus define a certain stage of production. The presence of phases in production is the reason why production processes are divided into the following types:

Processing, manufacturing, assembling, and testing process. Each production system has its specific characteristics. In the case of continuous production, the individual units of the production facilities must be located according to the product, while in the case of discrete ones the location of capacities, equipment, and workplaces depends on the applied production technological processes.

Process selection decisions are related to many of the decisions that are made in production management. The choice of process is a strategic decision that determines the type and form of organization of production or in other words – whether the flow of the process is for large-scale production or small-scale production.

When choosing the process, there must be informed about the expected volume of production, which automatically signals the need to link process solutions to the projected demand and capacity of the production system.

Thus, the freedom of choice is significantly limited, and the design and management of the production process depending on the factors: type and form of organization of production.

The type of production is a complex character of the technical, technological, organizational, and production processes. It is determined by the characteristics of volume and nomenclature, specialization of operations, and repeatability of products or services.

Depending on these features, the types of production are:

  • A single type of production – characterized as production with a wide range of small quantities or single pieces;
  • Serial production – production with, but with a large range;
  • Mass type of production – is characterized by the production of the same type of production, limited in variety, but with a large volume for a significant period.

The type of production is determined by either a conditional or an average value. it can be defined conditionally, depending on the type of production carrying out the final phase of the production process or as the predominant type of production units constituting the enterprise. The choice of a structure suitable for the structure, except the continuous flow, is generally a function of the volume of demand for the specific product or service.