Many of Checon’s major customers provide us with forecasts of one sort or another. Most are loosely based on their customers’ expected orders as well as on any additional estimates their customers may provide to them. As you can imagine, this continues on to our customers’ customer, that customer’s customer, and so on. So it comes as no surprise that any changes in demand from the end user of our products will often result in significant fluctuations in the forecasts throughout the supply chain.
For many suppliers this can lead to frustration. If you schedule production based on a forecast and the forecast then changes you may end up with excess inventory of one product and shortages of another. I’ve heard other manufactures express this frustration with statements like “their forecast is worthless”, or “full of hot air”, or “I don’t even bother to look at it”. That’s because they are using it for the wrong purpose. Don’t build based on forecast, plan with it!
Checon understands that we need a flexible manufacturing system that can respond to changes in demand both small and large. How large? Well that depends on our customer’s ability to ramp up its production. For those that can react, we have tailored our system to respond to large fluctuations. Working closely with our suppliers, we have integrated their response capabilities into a manufacturing system built on a foundation of short setup times, small production runs, strategic inventory points, and a fully automated Kanban pull system. How we load that system is based on our customer’s demand profile. The result is fast and flexible delivery that has been over 96% on-time for more than five years!
So what does this have to do with forecasts? Absolutely nothing! Checon’s agility allows us to manufacture based on our customer’s demand, not on their forecast. But their forecast can provide information about their current outlook. Will they take what they forecast? Probably not, but we can still glean valuable information from what they think they will take, and plan accordingly. So please, keep giving us your best guess at what you will need, and we’ll take it from there.