Lean and Forecasting: What Do You Need?

I was amused and a bit intrigued by a new report from a supply chain software and services company. The report from Supply Chain Consultants is entitled “Forecast Less and Get Better Results” and is written by authors Tom Wallace and Bob Stahl.

In a news release, Wallace comments,


In today’s era of lean manufacturing and sales & operations planning (S&OP), it has become more apparent that the approach of a highly detailed long-term forecast is not necessary. Instead, an aggregate planning tool that only uses detailed analysis for a short-term plan produces more valid results with better indicators of the future. Additionally, an aggregate approach in executive S&OP requires less work and enables a company to perform valid simulations quickly.


The news release claims the report


…challenges conventional forecasting and planning wisdom that states that companies need to project forecasts and plans far into the future at a detailed, highly granular level.


Is that conventional wisdom? It probably is among people who believe in forecasting. Personally, I don’t know, but I do know I have often heard the old adage that the forecast is always wrong.

More to the point, forecasting is something you rarely hear discussed among lean advocates. In a pull system, you produce based on customer orders, not forecasts.

Of course, you do need some type of high-level forecasting to plan purchasing, staffing and so on. But I wonder whether Wallace and Stahl are really saying anything that lean devotees haven’t known for some time.

What degree and level of forecasting does a lean operation need? That is the real question. If you have answers, please post them below.


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