Operations managers have two tools at their disposal by which to make decisions: actual data and forecasts. The importance of forecasting cannot be underestimated. For example, if we consider a product forecast and the functions of workforce, capacity, and supply chain management.
The workforce requirement is based on demand. This includes hiring, training, and the ability to flex the number and of staff with specific skills in the short term.
When the capacity cannot keep up to the demand, the result is undependable delivery, loss of customers, and maybe loss of market share. On the other hand, excess capacity can substantially increase operating costs.
Last minute shipping is high cost. Asking for parts last minute raises the cost. Most profit margins are tight, which means last minute decisions can wipe out the profit margin. Without the right budgeting software, all of these tasks can become far more complex and costly than they need to be.
These simple examples highlight why operational and financial forecasting is so important to an organisation. The best operations managers learn how to forecast, to trust the numbers, and to trust their instincts to make the right decisions for their business. The guidance of effective supply chain software can be a big part of that.