The Impact of Forecasting on Manufacturing Performances

Several operations decisions are based on some kind of forecast of future demand. For this reason, manufacturing companies pay significant attention towards this process and research has devoted attention to this issue. This paper investigates the impact of how forecasting is conducted on accuracy and operational performances. Attention is here paid on three elements that characterize the forecasting process: whether structured techniques are adopted, whether detailed information is used, and the extent to which forecasting is used in decision making processes. Analyses are conducted by means of data provided by the fourth edition of the Global Manufacturing Research Group questionnaire. Data has been collect from 343 companies belonging to several manufacturing industries from 6 different countries. Empirical analysis shows that the relationship between how forecasting is conducted and operational performances is not fully explained only by taking into consideration forecast accuracy. Results show that companies adopting a structured forecasting process have positive impacts on operational performances (here manufacturing cost and delivery are considered) not only through improved accuracy. The paper highlights the importance of proper design of the forecasting process in manufacturing environments since it can help to better understand the forecasting problem (i.e. demand variability), may reduce bias and coordinates all forecast users.