Improved Planning: Looking for clearer forecasts as recovery nears

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The latest edition of IndustryWeek’s Manufacturing Business Challenge has been published.

This month’s challenge discusses a maker of wireless and radio frequency components that is starting to see signs of an economic recovery but is very concerned with the risks of overestimating or underestimating the resurgence of business. They are struggling with what is needed from a process and technology standpoint to get an accurate picture of demand going forward. We were fortunate to have Dr. Larry Lapide, a research affiliate with MIT's Center for Transportation & Logistics, join us in providing his take on a solution to the challenge as described below:

Hinnts Wireless has been fortunate to weather a bleak two years. As CEO, I watched annual revenues fall 20% to approximately $225 million. A maker of wireless and radio frequency components for OEMs and system integrators, Hinnts is highly dependent upon commercial and industrial markets. As they slowed, we slowed. Now we are beginning to see our sales trickle back, and our major customers indicate that within six months they expect their orders to get back to prerecession levels. In addition, we are launching a number of new products over the next six months that promise to hit new markets and bring in new customers. While the severity of the market slowdown came as a surprise, I do not want us to be surprised when our markets rebound. Our management has always believed — perhaps, erroneously — that Hinnts has fairly level month-to-month sales volumes for all product lines, and so we relied on simple methods for scheduling production and triggering our supply chains. But as our markets get more complex, our scheduling will as well, and we cannot afford to overestimate or underestimate — as we've done in the past. I see now that every dollar counts, and the money we've lost on obsolete or discounted inventories, overstaffing, or missed sales would have made the last two years more bearable. I would like to have a more accurate picture of our customers and their plans and forecasts, and use that information more proactively to integrate production with our suppliers and to staff our plants. With a recovery likely, is it time to invest in processes and technologies to help Hinnts and our suppliers sense and respond to demand quickly and cost effectively? Can I afford the investment, and what can Hinnts expect to gain?

What would be your recommendation?

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