Impotance of Forecasting the Demand in Making Production Plan

Forecasting the demand is the most important part for any organization. Mirpur Ceramics are more concern regarding this issue. Based on market demand they need to forecast how much product they need to produce for the upcoming year. For demand forecasting issue they analyze the previous sales growth and the demand of the products. Mirpur Ceramics basically follow Naïve forecasting approach for making their forecast plan. Based on historical data they assume the future demand of the product. They always do market research and try to find out which specific product demand is high based on that they make a plan. But most of the time this forecasting demand not match with actual demand. Sometimes demand might be ups or down, based on situation. After analyze forecast demand they need to think about their production capacity. Based on forecast demand and their production capacity basis they need to make production plan.

There are many other external factors which sometimes impacts indirectly on ceramics business. The most important part is that they have their own warehouse. As a result if they produce more they can easily store within low cost. Sometimes they also face stock out problem. Because when a customer’s didn’t get their required product high chance to shift to the other organization. This might be a threat for Mirpur ceramics industry. The most important part is that Mirpur Ceramic industry mostly comfortable with Naive forecasting system regarding their forecasting analysis purpose and their management doesn’t like to change this strategy.

But in our opinion as a suggestion for Mirpur ceramics that they can use Drift method regarding demand forecasting time as a new forecasting technique to implement. Drift method is basically a deviation on Naïve forecasting technique to raise or fall forecasting eventually. Because history said that Mirpur ceramics faces both scarcity and surplus problem. But in Drift method they can use historical data based on that they may able to achieve a minimum level of percentage increase or decrease production level. As a result Mirpur Ceramics will not have to face product deficit or surplus related problem.

Inventory Management System of Mirpur Ceramics

Inventory management is the process through which an organization is ordering, shipping, handlings, prices all are keeps in record of eyes. The main objective of inventory management system is to pursue management goal by management of the product. The inventory management system of Mirpur ceramics look after the store department and the accounts department. First they purchased raw materials such as plaster of paris, china clay, ball clay, bone crush etc within huge amount quantity and stored for 6-7 months before production. Till final goods produce store department in charge is responsible to manage finished goods. Mirpur ceramics takes extra precaution so that there will be no wastage of raw materials. Not only that they imposed extra security for preventing risk of theft.
They now produce more than 30 million quantities of diverse products. They are not only fulfilling internal customers demand they also exporting different countries also. They basically follow different concepts of production and operation management system. Mirpur ceramics is now more investing on research and development department so that they may able to deliver more qualified product to their customers.

For keeping all the data in proper way inventory management system software is important. Through where Mirpur ceramics may keep all their records in an appropriate way. Mirpur ceramics has yearly turnover approximately more than 448 million taka. And they have also more than 20 billion taka business in the global market. That means if we cost of the Mirpur Ceramics industry that means this the industry of billion of taka which costs almost 500 million taka. The most important part is that an organization succession especially ceramics industries succession depends on their utilization of resources. That’s why they are concern this issue. They would like to use appropriate inventory management system so that they may able to keep all their data in an appropriate way.

Mirpur ceramics basically follows some techniques regarding their inventory management purpose. They stock minimum number of product on their hand all the times. Via this process Mirpur Ceramics can easily know about their stock. Before it stocks out they produce product so that they don’t have to face stock shortage related problems. Via this process Mirpur ceramics easily identify which products demand is more and how many product they have to stock. Based on that they may reproduce those products to fulfill customers demand. If we analyze overall scenario we can observe Mirpur ceramics is practicing techniques to manage relationships. Due to manage relationship, Mirpur ceramics may identify in between most and less demandable product. Based on that Mirpur ceramics may took decision. For less demandable product they produce less and most demandable product they restock. As a result they Mirpur ceramics may avoid less demandable product. That’s how they are using inventory techniques to manage inventories.

There are three categories of management inventory model. They are economic order quantity model, economic production quantity model and the quantity discount model. But among them Mirpur ceramics now practices quantity discount model regarding their inventory management purpose because they are now focusing cost cutting. That’s why they purchase a huge quantity of raw materials so that they can get quantity discount and reduce cost. But for this reasons sometimes they have lots of unsold products through which they have to bear a huge cost for hold those product. In real scenario, their inventory management techniques don’t match with economic order quantity model and economic production quantity model. However, in our perception regarding implementing those models, Mirpur ceramics may implement economic production quantity model on their organization so that this model give them clear idea regarding forecasting time and also helps to identify the actual demand of the particular product. Based on that information an organization can easily design their future production based on customers demand. As a result they may avoid extra cost and also able to produce the actual demandable product. Yes it’s true that they don’t enjoy cost cutting advantages but if they produce right product for their target customers they may make profit and also can cost cutting by produce that particular demandable product with large quantity.

Operational Performance Analysis-Productivity and Competitiveness

Strategy is basically a company makes planning to reach organizational long term goals. Mirpur Ceramics always try to develop their competitive position by competitive strategies via developing their products and services in an industry. Among the competitive strategies, they follow differentiation strategy. For organization differentiate purpose Mirpur ceramics always try to develop creative design so that they can keep themselves different from the other competitors. They pursue other strategies for measuring their performance management system which clearly describes the org key objectives, how to measure those objectives and also discuss what initiative need to take to achieve those objective. They also follow some strategies to compare what are their standard plans, what they achieve, what are the difference in between standard and achievement and what strategy they need to follow to overcome those problems. So that’s how by implementing those organization strategies, Mirpur ceramics knows about their actual performance and also understands how much effort they need to give for achieve organization goal. Operational strategy represents tactics and techniques which company uses to achieve organizational goals. Via operational performance analysis Mirpur ceramics may identify their market position. How much money they need to invest in near future and what are their performance parameters. Based on that information Mirpur ceramics takes final decision regarding their future investment. From operational performance analysis purpose Mirpur ceramics follow these below strategies:

• Time based strategy: Product production process takes very long time to manufacture or structured ceramic products. But by following certain planes and strategies the company management has shortened it. Mirpur ceramics purchase and stock the raw materials in advanced and sometimes manufacture products in advanced to meet the demand through the help of well-constructed forecasting. As the company have large of fixed customer and also have a lot of fixed orders and they normally get to know their requirement and demand which helps and enables them to produce and meet their expectations and demand within the required time. Also deliver their products within the period.
• Quality based strategy: Ensuring quality is one of the priorities of Mirpur Ceramics. They have an expertise to renovate the tactics and techniques of production. They are assuring all the ranges of ceramics with finest performance and features. From excellent sources, they are sourcing raw materials and by achieving this, they are also sustaining management of quality from start to finish procedure of manufacturing ceramics.
• Price based strategy: For building structure, clay products of structural have been utilized. Manufacturing expenses of Mirpur Ceramics have not been decreased in previous some of years. However, they have tried to deal with reducing expenditures and have offered their products to customers at fair price using their management of ability and competence skills and having the first mover advantage in 03 sectors as well.
• Location based strategy: Around Dhaka the majority of production, construction and also industrialized is taking place. Because of MCWL is situated in Dhaka’s center, they have competitive and also market advantage over others. The company has wide also maintained well-structured supply chain that helped them as well as enables them to make their products available at various locations.
• Service & Flexibility: Customers are the main asset for them. They manufacture all types of ceramics derived from customers’ choices. With renew & variation of products and services, fulfilling requirements of customers and giving fast services to their customers by having company’s transportations system, Mirpur ceramics is making sure proper flexibility and services.

They believed that all this operational strategies go with their organization. That’s why regarding operational performance analysis issue Mirpur ceramics uses those strategies so that they may measure their actual performance of the organization. But in our opinion these strategies just give them idea regarding improvement their existing performance. But in our suggestion Mirpur ceramics should develop some controlling strategy regarding their operation performance analysis purpose through which they can explore new demand, and able to differentiate their product with low cost. Mirpur ceramics will also be able to explore new and innovated product which creates market demand, and via explore new techniques they will know how to produce product within cheap price, as a result they will able to offer low price comparatively from their competitors and to achieve competitive advantages from their competitors and create strongest market position via offering new and innovate product.

An organization succession or failure measure by these two factors one is order qualifier another one is market winner. Analyze these two factors any organization can easily identify their market position based on that they can plan their next strategy. Mirpur ceramics are always concern those two factors. And make their business strategy based on those factors. Those two factors are order qualifier and order winner. Order qualifier and order winner is the criteria and deciding factors which influence customers use to make buy decisions. An order qualifier is the features which are considered by a customer before purchase product. That means that particular product have minimum standards or features what a customers expect from the product. Mirpur ceramics’ main theme is “Lifetime Investment”. That means a customer can use Mirpur ceramics product for life time. That means that product has that quality to service for life time. And customers expectations that level high from Mirpur ceramics. If Mirpur ceramics failed to maintain their product quality standards that means customers never purchase product from them and shift to the other brands product which one fulfill their demand. Order winner is the process through which a customer always chooses any particular organization product and service. There are some attributes which influence customers to purchase that particular brands product. Like product quality, speed, reliability, design, flexibility, brand image, customer relationship. On that case Mirpur ceramics are always concern those issues. When they did a new contract with new customers they always try to give them fast service so that that particular customer turned in to their regular customers. The important fact is that they always try to represent new design in the market that’s why Mirpur Ceramics investing a lot on their research and development project. They always try to maintain their product quality and standards and always give priority customers demand. Not only that when they got any customers complain regarding their product quality issue they took immediate action so that customers will never get dissatisfied. For these reason there have some loyal customers when they would like to purchase ceramics product they prefer Mirpur Ceramics. This loyal customer also suggests their friends and family too. As a result the brand name of Mirpur ceramics spread word of mouth. This order winner helps the organization to achieve competitive advantages. Because customers reject other brands and choose Mirpur ceramics which creates more market value in the ceramics industry.

Reference

1. Mirpur Ceramics Official webpage. Retrieved from https://mirpurceramic.com/
2. Mcnamara, C. Introduction to Operations Management of Products and Services: Overview and Resources. Retrieved from https://managementhelp.org/operationsmanagement/
3. Demand Forecasting: Concept, Significance, Objectives and Factors. Retrieved from http://www.economicsdiscussion.net/demand-forecasting/demand-forecasting-concept-significance-objectives-and-factors/3557
4. Some simple forecasting methods. Retrieved from https://otexts.com/fpp2/simple-methods.html