From Raw Materials to Finished Goods: Forecasting in Manufacturing Across the Entire Value Chain

Manufacturing is a complex industry where numerous opportunities for optimization exist. However, laying that path requires a significant amount of time and effort. One approach to this is to use forecasting. However, while some companies only do supply chain forecasting, this is far from the entire spectrum of possibilities.

Today’s article will take you through different forecasting methods in manufacturing to ensure that you’re getting the most out of your analytics. From cutting costs to becoming more energy efficient, this will lay the groundwork for your growth and optimization.

Forecasting in Procurement & Raw Materials

So, the start of your manufacturing process optimization lies in building a forecast system for your procurement pipeline. This one step holds key benefits that allow you to do the following:

• Anticipate price changes and buy materials at low prices.
• Predict potential disruptions and preorder goods ahead of time.
• Avoid undersupply issues during shortages.

Let’s go back to 2021, when a steel shortage in the US led to skyrocketing prices. Many companies were left scrambling to procure the metal in a market full of competitors.

In this case, analytics might have helped businesses spot disruptions in the supply lines and manage to stock up just before the crash occurred. While we won’t claim that such major crises will occur regularly or that any forecasting system can guarantee complete immunity, being able to avoid any kind of price hike is a significant advantage.

Forecasting in Supply Chain & Logistics

Supply chain visibility is crucial in the manufacturing industry because it enables pre-planning of production, scheduling shipments to mitigate potential disruptions, and streamlining logistics overall. There is a pretty large variety of factors affecting supply chains, from general delivery slowdowns to geopolitical crises to inflation sending freight rates up. Each of these can end up ballooning the final cost of materials and goods, making them less profitable.

Using forecasts based on industry data, you’ll be able to avoid your cargo getting stuck in an overwhelmed port or diverted from the route due to some canal closures. It’s also helpful in that you’ll know exactly when shipments arrive and depart, allowing you to sync production with those times. This way, you will never experience overflowing warehouses or line stoppages while you wait for a resupply.

Just as with raw materials forecasting, you can reduce overall production costs and avoid delays that your competitors may face. Staying keyed into the logistics analytical data will let you optimize your fleet’s movement, set efficient routing, and perform faster deliveries.

Workforce Forecasting in Manufacturing

One area of forecasting that is often overlooked is the analysis of the workforce, which enables businesses to anticipate changes in available labor and adjust their scheduling accordingly. This may seem like a simple process, one that doesn’t require complex analytics, but the reality is that many manufacturers experience overstaffing during periods of low demand. Conversely, others face shortages of employees when they’re needed the most.

Addressing this means logging data on the average amount of labor spent per cycle and then correlating it with the market’s dips and peaks. This will allow businesses to set shifts for different workers in a way that ensures there is always enough workforce without anyone experiencing burnout.

Doing this can help reduce human error in production, improve employee satisfaction, and prevent workplace accidents that stem from fatigue and overworking. It’s a socially responsible and fiscally prudent move that highlights the need to forecast not just supply chains.

Forecasting for Inventory & Spare Parts

Manufacturing-specific forecasting is relevant even beyond the actual production line, as it can aid in assessing the state of your finished goods. That way, you can understand when spare parts may be required and in what quantities, always keeping a reasonably sized stock. As a result, you can provide efficient and speedy customer service without incurring additional production expenses.

Speaking of stocks, AI analytics provide an in-depth understanding of your inventory levels and their fluctuations. By compiling that data and insights about demand changes, you can ensure that you’re never saddled with too much unused inventory, preventing capital lock-ins. Research indicates that machine learning can play a crucial role in tracking optimal supply levels and meeting customer needs.

So make sure to include finished goods forecasting in your pipeline if you want to maximize warehouse space usage without experiencing goods depreciation in a sparse market.

Sustainability & ESG Forecasting

Modern businesses place a great deal of emphasis on sustainability and social responsibility, and for good reason. Younger consumers care about brand identities and carbon footprints more than older generations, and as their purchasing power grows, companies must adjust.

Forecasting can be useful here as it estimates how much energy your production cycles will require and what the amount of emissions from them will be. Having this information early on can let you determine whether it’s time to change energy sources and how far away your sustainability goals are from being reality.

This also covers the legal compliance part of sustainability, as the EU and its member countries have to offer comprehensive reports on their carbon footprints. As regulators ask for more sustainability, companies will need analytical tools to understand which parts of their operations can turn “greener”.

Why End-to-End Forecasting Needs Custom Software

The end-to-end manufacturing value chain can be reorganized through precise forecasting, removing any unnecessary expenses and ensuring that your business runs smoothly. However, doing that isn’t just a matter of looking at some data. You will need powerful software to gather, clean, and process these data sets, as well as provide comprehensive reports on them.

This is where custom software development companies like Integrio are essential, as we offer everything from IT support services for existing solutions to building bespoke products for you. As a result, you will have secure, proprietary systems that collect information from your business and the market, analyzing them to find areas for growth.

Custom software can be tailored exactly to your manufacturing floor, connected to the machinery, and set up to match your operational flow. You can also make it very accessible to ensure employees on the production floor can use it if necessary, inputting data manually. That kind of flexibility and customization is hard to get from off-the-shelf solutions, especially at a reasonable price.

Speaking of price, a custom solution’s cost is transparent, whereas generic software may require years of paying for a subscription, and the rate could increase at any point. It’s also possible that it will gate off the most impressive features behind higher, more expensive subscription tiers. With a custom solution, you have full control and can update it whenever needed.

Conclusion

As we’ve illustrated above, forecasting is a powerful tool for manufacturing businesses, as long as you apply it to all areas, not just the supply chain. There’s a lot of value to be gleaned from analyzing your operations and the market at large and predicting changes that would blindside you otherwise.

From avoiding supply disruptions to planning deliveries with peak efficiency, forecasting gives you the tools to never be derailed again, even in the case of a crisis. Apply the above methods to your own production and procurement and witness the improvements for yourself. It’s an essential choice for modern businesses seeking to be sustainable, cost-effective, and intelligent.

So get in touch with Integrio today to build your custom forecasting system and start peering into the future of the industry, outpacing your competition and avoiding roadblocks. We can provide software tailored specifically to your business and offer long-term support to keep it up-to-date with cutting-edge features. Let’s begin today.

FAQ