Statistical forecasting in operations management uses a company’s past data to predict future trends and identify areas that can be improved. This type of forecast is referred to as a statistical forecast because mathematical formulas are used to pinpoint patterns while testing the results for mathematical probability.
The first step in this forecasting method is to gather historical data on your company’s internal processes such as purchasing, quality, inventory, flow of goods and storage. These statistics are then used to identify problem areas and develop an improvement plan to increase efficiencies.
The basic steps to statistical forecasting in operations management are:
1. Use software to collect your company’s historical operations data.
2. Analyze the data to develop an operations management forecast.
3. Develop strategies for improvement.
4. Implement changes.
5. Monitor your progress.
Learn the basics of business forecastingIf you are unfamiliar with the fundamental principles of operations management forecasting, there are several excellent sites where you can get a crash course.
Ensure management's use of statistical forecastingManagement's support is key when putting management forecasting methods into practice. There are many options for training and educating management.
Engage a professional operations management forecasting firmData analysis and interpretation can be a daunting process. You may need a professional who is trained in statistical forecasting methods to guide you.
Install an operations management forecasting software programThere are several excellent software programs that integrate both financial and operations forecasting. There are also web-based programs that offer online statistical forecasting and data analysis.
- In addition to forecasting software, your business also needs a good operations management software program. The right program will help you track all aspects of operations including materials management and work crew scheduling. This type of program is foundational to your business and will work hand-in-hand with your statistical forecasting software.
- For short-term forecasting, don't go back more than 60 months, since recent statistical methods carry more more weight than the past.