A key factor for success for a retailer is a phenomenal forecasting process and resources (Jack Barker, 2015) because forecasting is a fundamental part of Spar Group Limited supply chain operations. To assist in leveraging this key factor, Spar Group Limited develop protocols for forecasting, and select a forecasting team with representatives from all the trading partners and stakeholders. Spar uses forecasting systems to provide a clear and actionable path for business activities, this helps the business to conquer certain market challenges (Graham O’Conner, 2018). Spar’s production forecast and scheduling process are broken down into two parts: planning, based on a monthly forecast, of assembly and components orders and daily scheduling of packaging custom products and sterilization based on finished goods inventory levels. During the fourth quarter of each fiscal year, Spar’s marketing and finance teams determine the annual forecast. The annual forecast is broken down based on proportionately, based on the number of weeks in the month, into monthly forecasts. This is a form of a qualitative approach to forecasting. As the year progresses, the forecasting team works with the marketing team to make forecast adjustments according to market trends and events in the food retail industry. Based on these marketing trends and events an annual demand forecast report is produced and is used by the finance team to compile an expected/forecast annual revenue. At the beginning of each month, the month’s forecast is adjusted and agreed upon. The planning of assembly for Spar products begins with a monthly demand forecast. Based on the month’s forecast, the central planners determine the amount of product that needs to be transferred from bulk inventory into finished goods inventory to meet the expected demand. Production forecast and replenishment orders are based on monthly demand forecast and current inventory levels. By mid-month, the completed monthly plans, which contain the monthly forecast, are sent to the production business unit. A planner in the business unit plugs the forecasts into a Material Requirement Planning (MRP) system, which determines weekly production schedules and orders for each finished goods, thus making it easier to meet expected customer demand. Spar also incorporates a time series forecasting model to their material, processes and demand forecast. Based on consumer’s past purchasing patterns spar knows it needs to maintain a safety stock policy of three weeks to satisfy forecasted demand. Spar uses a phenomenal technique and philosophy for their forecasting, however there is still room for improvement. As a recommendation the retail should not forecast long term but rather shortterm since short term forecast are more accurate. The aggregate forecasts are generally more accurate than individual stand-alone forecasts due to a lower standard of deviation. Explain why forecasting accuracy is important for Spar. Note: Note: you are required to provide a paraphrased understanding of the concept before providing at least two application points.
A key factor for success for a retailer is a phenomenal
Barker, 2015) because forecasting is a fundamental part of Spar Group Limited supply chain
operations. To assist in leveraging this key factor, Spar Group Limited develop protocols for
forecasting, and select a forecasting team with representatives from all the trading partners and
stakeholders. Spar uses forecasting systems to provide a clear and actionable path for business
activities, this helps the business to conquer certain market challenges (Graham O’Conner, 2018).
Spar’s production forecast and
based on a monthly forecast, of assembly and components orders and daily scheduling of
packaging custom products and sterilization based on finished goods inventory levels.
During the fourth quarter of each fiscal year, Spar’s marketing and finance teams determine the
annual forecast. The annual forecast is broken down based on proportionately, based on the
number of weeks in the month, into monthly forecasts. This is a form of a qualitative approach to
forecasting. As the year progresses, the forecasting team works with the marketing team to make
forecast adjustments according to market trends and events in the food retail industry. Based on
these marketing trends and events an annual demand forecast report is produced and is used by
the finance team to compile an expected/forecast annual revenue. At the beginning of each
month, the month’s forecast is adjusted and agreed upon. The planning of assembly for Spar
products begins with a monthly demand forecast.
Based on the month’s forecast, the central planners determine the amount of product that needs
to be transferred from bulk inventory into finished goods inventory to meet the expected demand.
Production forecast and replenishment orders are based on monthly demand forecast and current
inventory levels. By mid-month, the completed monthly plans, which contain the monthly forecast,
are sent to the production business unit. A planner in the business unit plugs the forecasts into a
Material Requirement Planning (MRP) system, which determines weekly production schedules and
orders for each finished goods, thus making it easier to meet expected customer demand. Spar also
incorporates a time series forecasting model to their material, processes and demand forecast.
Based on consumer’s past purchasing patterns spar knows it needs to maintain a safety stock policy
of three weeks to satisfy forecasted demand.
Spar uses a phenomenal technique and philosophy for their forecasting, however there is still room
for improvement. As a recommendation the retail should not forecast long term but rather shortterm since short term forecast are more accurate. The aggregate forecasts are generally more
accurate than individual stand-alone forecasts due to a lower standard of deviation.
Explain why forecasting accuracy is important for Spar.
Note: Note: you are required to provide a paraphrased understanding of the
concept before providing at least two application points.
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