Demand forecasting in its simplest form is the prediction of what your production needs of customers will be, and what demand for supply of components, parts, sub-assemblies or final assemblies are needed to avoid stock-outs, to sync with production flow. The inputs from your engineering, product development, operations and production team can be considered “stakeholders” in the outcome. For M-Wave, the periodic usage and our demand stocking requirements are the result of a collaboration of the relevant parties to the internal supply chain information and requirements. We and our Asian partners focus on that information and its effect to planning external supply chain, to ensure a positive outcome.
As a matter of reference determination of the demand forecasts is done generally through these steps:
- Determine practicality of a demand-stocking program primed by a forecast
- Determine the products involved (parts, sub-assemblies or assemblies)
- Determine the appropriate Asian partners and their procurement and production requirements and timing
- Determine the optimal time period for the forecast (normally three to 12 months)
- Use appropriate forecasting model(s) both qualitative and quantitative
- Factor in all country-based time and cost aspects: Asian component procurement and production time, inspection, cartage, mode of shipment (e.g. air freight or waterborne), inspection, regulatory obstacles, customs clearance and final delivery
- Type of stocking including just-in-time, kanban binning, demand pull in-plant stores and intermediate warehousing
- Safety stocks and turnover agreements
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