PRODUCTION AND

OPERATION MANAGENT
TOPIC :- Strategic planning and
demand forecasting

SUBMITTED BY : PAYAL VASHISHT

ROLL NO. 832
SYBMITTED TO : Ms. Jasmeet Kaur
ma’am
 WHAT IS STRATEGIC PLANNING ?

 Strategic planning is a management task by an organization to prioritize, focus energy and

resources, build better operations and affirm the goals of the employees and the stakeholders so
that the desired results can be achieved keeping in mind the flexibility of the work that is done in
sync with the changing environment. It is a way of conducting the work in a more organized
manner so that such decisions are take which are more goal oriented.
 THE TWO BROAD PLANS THAT HELP IN ORGANISATIONAL
EFFECTIVENESS ARE :-

STRATEGIC OPERATIONAL
PLANNING PLANNING
 HOW IS STRATEGY AND
FORECASTING INTERRELATED ?
 Companies use strategies to reach their goals. One of the key elements of a company’s
operations is forecasting what goals are realistic, and to what extent the company will achieve
them. Small business sometimes make forecasts and repeatedly miss their targets. Integrating
forecasting into their business strategies can increase the accuracy of their forecasts and help
the to reach the goal set.

 STRATEGIES
A strategic approach to business operations sets targets matching the company’s
long term goals, and identifies initiatives that will allow the company to reach them.
The company implements the strategies and checks whether the results are in line with
the targets. If not, company has to change strategies and implement new initiatives.
 FORECASTING
Companies not engaged in strategic forecasting treat forecasting as a separate
function. Companies try to forecast the behaviour of the variables of their
business environment and arrive at possible sales and profit figures. They base
their strategies on realistic targets drawn from these forecasts.
  ENVIRONMENT
Strategic forecasting brings the two functions together by placing the forecasts in a
specific environment. Company strategies include influencing the environment to
correspond to that used for forecasts. At the same time, companies recognize that
changing variables in the environment may influence forecasts. In this way
companies use their operating environment to strategically link the forecasting and
planning functions, improving the performance of both.

 DECISIONS
When companies use strategic forecasting in this way, it lets them make decisions
that more accurately reflect their situations. If a particular cost variable goes up
unexpectedly, the company ca see the effect on the forecasts and targets. It can
react by compensating for the cost change or y adjusting targets to reflect it.
Strategic forecasting makes the company’s operations sensitive to market factors on
a continuous basis.

 CONCLUSION
At times, it does happen that small businesses make forecasts but miss their
targets. If the forecasting is well integrated in their business strategies, the accuracy
of the forecasts can be enhanced and also the required goal can be attained.
 WHAT IS MEANT BY TERM FORECASTING?
 The growing competition, frequent changes in customer’s demand and the trend
towards automation, demand that decisions in business should not be based purely on
guesses rather on a careful analysis of data concerning the future course of events.
More time and attention should be given to the future than to the past, and the
question ‘what is likely to happen?’ should take precedence over ‘what has happened?’
though no attempt to answer the first can be made without the facts and figures being
able to answer the second. When estimates of future conditions are made on a
systematic basis, the process is called forecasting and the figures or statement thus
obtained is defined as forecast.

 THE FOLLOWING ARE THE MAIN FUNCTIONS OF

FORECASTIG :-
 The creation of plans of action.
 The general use of forecasting is to be found in monitoring the continuing
progress of plans based on forecasts.
 The forecasts provides a warning system of the critical factors to be monitored
regularly because they might directly affect the performance of the plan.
 ENVIRONME SR
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RESULTS
 OPERATIONS STRATEGIC PROCESS :-

1.MAKING A PLAN
2. SCANNIG THE ORGAIZATION’S
VALUE

3. MISSION DEVELOPEMENT
4. STRATEGIC BUSINESS
MODELIING

5. AUDITING & ASSESSMENT

6. IMPLEMENTING ACTION
PLANS
1.MAKING A PLAN :- Whenever the organization is making a plan, it needs
information of the external and internal forces in the environment. The external forces
include political conditions, technology, competition in the market. The internal forces
include customers, suppliers, finances, labour, brand of the product or the company,
relation with them and excess to resources and markets.
2.SCANNING THE ORGANIZATION’S VALUE :- Scanning the organization’s
value means there is an analysis to understand the company’s culture and values. It
is the people who build the organization’s culture and it is their efforts that make the
organization shine. The belief system, the passion towards the work, the motivation
to do their best is one thing that helps the organization progress.

3.MISSION DEVELOPMENT :- Once the goal of the company are clear, it

is high time that the company takes the necessary steps to retain them and it
originates from the vision. This vision is basically a dream of the management for the
company at its zenith, exemplifying the best business, best technology and best
culture. It is like a mental environment in which one wants to see is company in a
stipulated time period and the underlying conditions. This is the backbone for the
company to exist.
4. STRATEGIC BUSINESS MODELLING :- This involves being able
to decide the lines of the business on which you wish to run it and fixing a number of
important performance measurements so that the company can decide it milestones.
These business modelling measures run on national or global sales indicators like ROI or
ROE (Equity),which basically tells how a product is to be produced or it is marketed for the
intended growth.

5. AUDITING AND ASSESSMENT :- The auditing is conducted

through a self assessment by giving the task to consult to give an unbiased
perspective to the problem so that an objective assessment can come to fore.
This gap can be removed by following ways :--
 Internal expansion : Adding new sister concerns or start ups within the
organization or mergers and acquisitions.
 Changing the management : Changing the management levels and
eliminating the laggards who have become a liability to the company.
 Expanding he timeline : Extending the timeline so that more time can be
taken to cover the lagging.
 Lowering the goal : Making the goal more visible and lowering so that it
becomes achievable.
 CONTINUED…
 6.IMPEMENTING ACTION PLAN :- This step basically is
the final step in the action plan where all the plans contingency plans and
strategy implementation are integrated as planned in the initial time. Also,
stress is laid on any kind of flexibility that is needed at the time of action based
on the changing environment.

 CONCLUSION : It is solely dependent on how the organization

wants to implement the plans, in what time and whether it has the required
resources and people to achieve the same. So, it has to be adaptable at all
times to the changing times to be able to succeed to its goals.
 FORECASTING METHODS
 The forecasting methods here are procedures that are used to convert information about
the environment and the organization’s strategy to reach to its goals into statements
about future results. The results are meant to be either favourable or unfavourable
depending on the environment.

 There are two types of forecasting methods :-

QUALITATIV QUANTITATIVE
E METHODS
METHODS
 QUALITATIVE METHODS

SALES
EXECUTIVE MARKET DELPHI FORCE
OPINION SURVEY COMPOSITE
APPROACH APPROACH
METHOD
APPROACH

In which Approach that Approach in In which

group of uses interviews which an each sales
and surveys to agreement is person
managers judge reached
meet and estimates
preference of among a
develop a customer and to group of sales in
forecast assess demand experts region.
 QUANTITATIVE METHODS
 TREND ANALYSIS :- A method for forecasting sales data when a definite upward and downward
pattern exists. Model includes double exponential smoothing , regression &triple smoothing.
 SEASONAL ADJUSTMENT :- Seasonal models take into account the variation of demand from
season to season. Adjustments can be made to a behave forecast to predict the impact of a seasonal
demand.
 DECOMPOSITION :- A method of forecasting where time series data are separated unto up to
three components trends seasonal, and cyclical ; where trend includes the general horizontal upward
or downward movement over time ; seasonal includes a recurring demand pattern such as day of a
week, weekly, monthly or quarterly; and cyclical includes any repeating, non seasonal pattern.
 GRAPHICAL METHODS :- Plotting information in a graphical form. It is relatively easy to convert
a spreadsheet into a graph that conveys the information in a visual manner. Trend & patterns are
easier to spot &extrapolation of previous demand can be used to predict future demands.
 ECONOMETRIC MODELLING :- A set of equations intended to be used simultaneously to
capture the way in which dependent and independent variables are interrelated.
 LIFE CYCLE MODELLING :- It is based on applying past patterns of demand data covering
introduction, growth, maturity, saturation, and decline of similar products to a new product family
THANK
YOU