Standardizing the Forecasting Process to Improve On-Time Delivery Performance: A Case Study in a Finnish Engineering and Manufacturing Company

Abstract

This study investigates current forecasting practices and their impact on on-time delivery (OTD) performance across different manufacturing units of the case company in Europe. In addition, It considers whether a consistent forecasting process could improve supplier OTD performance at a Finnish engineering and manufacturing company with different sites in Fin-land, Italy, and the Czech Republic. The research indicates different forecasting approaches across these sites, leading mixed demand signals, planning challenges, and issues on the suppliers shop floor.

This research aims to improve supplier on-time delivery performance by enhancing the cur-rent forecasting process. It assesses current forecasting practices across selected manufac-turing units, identifies misalignments among them, and investigates the relationship between forecasting accuracy and supplier on-time delivery performance. Furthermore, it offers im-provement recommendations for a more standardized forecasting process and proposes a swimlane process flowchart. A mixed-method case study approach is used, combining semi-structured interviews with internal and external stakeholders, with quantitative data analysis of forecasted demand, actual orders, delivered quantity, and OTD performance.

The case companies forecast accuracy is evaluated using MAPE, RMSE, forecast Bias, and forecast Consumption, and then compared with suppliers on-time delivery performance. The research findings show visual differences between selected factories and suppliers in both forecasting accuracy and delivery performance respectively. In most cases, poor forecasting, either under-forecasting or over-forecasting has an impact on low OTD, planning instability, material shortage, and raised operational challenges. Whereas it also indicates that accurate forecasting is not guaranteed good delivery performance, as on-time delivery is also influ-enced by other factors, such as geopolitical issues, cultural issues, supplier location, trans-portation, and sub-tier supplier materials issues, which are selected by the case company.

The study concludes that acquiring a standard common forecasting process can support con-sistent planning, cross-functional alignment across the selected factories, and supplier relia-bility. Based on these key findings, the study recommends clear roles and responsibilities for the different stakeholders in the case company, including global supply planning, material management, purchasing, and engineering. In addition, it suggests developing a common forecasting process, review routines, and supplier communication to enhance forecasting accuracy and supplier OTD performance.