Advantages and Disadvantages of Forecasting Methods of Production and Operations Management
Companies apply forecasting methods of production to anticipate potential issues and results for the business in the upcoming months and years. Forecasting methods can include both quantitative data and qualitative observations. Operations management techniques help businesses determine the actions they should take to bring about favorable results and avoid unprofitable scenarios based on those forecasts. These techniques frequently involve the development and distribution of both new and existing products and services.
Businesses employ a diverse array of forecasting methods to evaluate potential results stemming from their decisions. The most notable advantage of quantitative forecasting methods is that the projections rely on the strength of past data. The chief advantage of qualitative methods is that the main source of data derives from the experiences of qualified executives and employees. The vast majority of business owners blend the hard data with personal impressions to develop useful forecasts.
The primary disadvantage of forecasting is the same as that of any other method of predicting the future: No one can be absolutely sure what the future holds. Any unforeseen factors can render a forecast useless, regardless of the quality of its data. Also, some forecasting methods may use the same data but deliver widely different forecasts. For instance, one forecasting method can show that interest rates will rise, while another will illustrate that rates will hold steady or decline.
Operations management techniques act as key factors toward achieving business objectives by examining each facet of the company, ranging from production to sales to employee relations. These methods allow businesses to apply their resources toward bringing out products and services that meet the needs of their customers. The main advantages to operations management involve how these principles can reduce production costs, increase revenues, encourage higher customer satisfaction ratings and build a structure that encourages innovation and industry leadership.
The success of any operations management plan relies on the capabilities of each department to work together to achieve the plan's objectives. The most glaring weakness in operations management becomes apparent when departments fail to work together in a cohesive manner. The lack of cohesion may arise from poor communication, lack of resources or intra-company political strife. When each department spends its efforts toward protecting its territory or declaring its importance, the company becomes a house divided, and the operations management plan will inevitably fail.