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Management article
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Reference no. 94302
Published by: Harvard Business Publishing
Published in: "Harvard Business Review", 1994

Abstract

Faced with an unprecedented number and variety of products on the market, managers are finding it more difficult to predict demand and plan production and orders accordingly. As a result, inaccurate forecasts are increasing and, along with them, the costs of those errors. A new approach to the entire forecasting, planning, and production process, accurate response entails first figuring out what forecasters can and cannot predict well. Then supply chains must be made fast and flexible so that managers can postpone decisions about their most unpredictable items until they have some market signals--like early-season sales results--to help correctly match supply with demand. Accurate response enables companies to use the power of flexible manufacturing and shorter cycle time much more effectively.

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Abstract

Faced with an unprecedented number and variety of products on the market, managers are finding it more difficult to predict demand and plan production and orders accordingly. As a result, inaccurate forecasts are increasing and, along with them, the costs of those errors. A new approach to the entire forecasting, planning, and production process, accurate response entails first figuring out what forecasters can and cannot predict well. Then supply chains must be made fast and flexible so that managers can postpone decisions about their most unpredictable items until they have some market signals--like early-season sales results--to help correctly match supply with demand. Accurate response enables companies to use the power of flexible manufacturing and shorter cycle time much more effectively.

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