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.
Action Steps
The best contacts and resources to help you get it done
Learn the basics of business forecasting
If you are unfamiliar with the fundamental principles of operations management forecasting, there are several excellent sites where you can get a crash course.
I recommend: Forecasting Principles offers a complete forecasting dictionary, a handbook on the Standards and Practices for Forecasting and other practical guides.
Statistical Forecasting provides detailed information on the various statistical methods of forecasting.
Ensure management's use of statistical forecasting
Management's support is key when putting management forecasting methods into practice. There are many options for training and educating management.
I recommend: The
Institute of Business Forecasting & Planning offers a hands-on workshop in five locations across the nation that features experienced speakers from well known companies who share their knowledge and expertise. The IBF also offers onsite training.
Applied Business Forecasting, LLC also offers both online courses and onsite training programs from an applied perspective.
Engage a professional operations management forecasting firm
Data analysis and interpretation can be a daunting process. You may need a professional who is trained in statistical forecasting methods to guide you.
I recommend: The
International Institute of Forecasters is a professional organization that can help you locate business forecasting specialists in your area. A list of statistical forecasting firms can be found at
ThomasNet.
Install an operations management forecasting software program
There 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.
I recommend: Work.com offers a
Guide to Statistical Forecasting Software that contains the latest information on how to manage your business more efficiently with statistical forecasting software.
MBAWare offers a variety of forecasting software solutions for businesses that contain advanced forecasting methods.
Tips & Tactics
Helpful advice for making the most of this Guide
- 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.
The official source of Statistical Forecasting in Operations Management is
the Statistical Forecasting in Operations Management page at Business.com
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