Reducing the Need to Forecast

Virtually every substantial business devotes a good deal of effort to forecasting demand. There are of course sound reasons for this. Companies require long term projections for capacity planning, for product development and for other strategic purposes. Medium term data are needed for tactical planning for financial, marketing and personnel. The value of short term forecasts, essentially used for production planning, is more problematical. This activity does not add any apparent tangible value and, moreover, is almost inevitably doomed to failure. Attempts to improve forecasts, a very common activity, often merely serve as tactics to divert management's attention from far more critical problems in a product's value system. An alternative approach is to develop value systems in which production forecasts are no longer needed.