Benito E. Flores

The integration of manufacturing and marketing/sales decisions: impact on organizational performance

Abstract Research in the areas of both manufacturing and marketing/sales have advocated the integration of several important interrelated decisions between the two functions (i.e. product development, process development, marketing/sales planning, and manufacturing planning decisions). The process of managing the strategic alignment between a firm’s business strategy, external environment, and the integration of manufacturing and marketing/sales decisions is very complex phenomenon that requires a level of analysis that has not occurred previously. This study examined the moderating effects of business strategy and demand uncertainty on the relationship between the integration of manufacturing and marketing/sales-based decisions and organizational performance. The study found general support for the proposed model, suggesting that the impact of the integration of manufacturing and marketing/sales decision on organizational performance is moderated by a firm’s business strategy and demand uncertainty.

An international study of quality improvement approach and firm performance

Investigates what approaches to quality lead to best quality and financial performance across different regions of the world. Reports a survey of 977 firms in Asia/South Pacific, Europe, and North America. Fifty‐two items that suggest how a firm might improve quality were factor analysed and grouped into 11 factors, each factor a broader approach to quality improvement than any one item. Actual quality was measured eight different ways. Each approach to quality improvement (factor) was correlated to each quality measure, as well as to several financial measures. The results suggest that a company’s approach to quality correlates to actual quality and to a lesser extent to financial performance. The major factors found to influence actual quality were the organization’s knowledge of quality management, its degree of customer focus, and management involvement. When the task was to predict performance outcomes in any region, the specific factors that best predict performance were found to vary from region to region. That is, there were specific models within a region that better predicted performance than the model which predicted performance across all regions.

Management of multicriteria inventory classification

The most common method that materials managers use for classifying inventory items for planning and control purposes is the annual-dollar-usage ranking method (ABC classification). Recently, it has been suggested that multiple criteria ABC classification can provide a more comprehensive managerial approach, allowing consideration of other criteria such as lead time and criticality. This paper proposes the use of the Analytical Hierarchy Process (AHP) to reduce these multiple criteria to a univariate and consistent measure to consider multiple inventory management objectives.

Forecasting practices of Canadian firms: Survey results and comparisons

Abstract A survey of forecasting practices was carried out to provide a better understanding of Canadian business practices, and when possible, compare them with US practices. Companies in the US and Canada have the same use for forecasting information. Forecasts are generated and used mostly by marketing/sales. Judgmental procedures are used more frequently than any other method. Quantitative, causal and newer methods are not used as much. In line with this, firms do not keep as much data per product/service forecasted. Senior management revises the forecast frequently and believes that on average, accuracy is improved by the revision. Calculation of improvement metrics shows that the variation in the improvement may negate the advantage gained.

A pragmatic view of accuracy measurement in forecasting

Accuracy measurement in forecasting is always a subject of debate because of its importance. An adequate metric is necessary to properly select a forecasting method for a specific application. Competitions to determine the best method have helped the practitioner. The criteria for selection have not received as much attention. Of the two kinds of measurement statistics--relative and absolute--the former may present problems for the user if zeros or near zero values appear. This is more a practitioner problem because artificially generated time series do not usually have zeros. The relative and absolute measures are discussed and a solution for the existence of zeros in the data is given. If symmetry of the errors is a problem solutions are discussed. Managers will select the metric depending on the application and their management style. Once the metric has been selected the decision as to which forecasting method to select in a given situation becomes a less difficult problem.

Quality improvement practices and the effect on manufacturing firm performance: Evidence from Mexico and the USA

A comparison of organizations in Mexico and the USA demonstrates that, for these two countries, different quality improvement approaches are related to actual quality and financial performance. For 345 firms multiple quality improvement variables are correlated with seven quality measures, four financial measures, and one operating performance measure. Results suggest that in both countries an increase in employee involvement leads to improved quality-a decrease in internal failure costs, the percentage of items defective, and costs of quality. In Mexico an increase in employee knowledge about quality improvement and customer focus also leads to improved quality (as measured above). In the USA, but not in Mexico, the quality improvement approach relates to financial performance. An increase in senior executive leadership and an increased emphasis upon both design and conformance in the USA leads to an improved return on assets and increased net profit. In each country similar distributions from respondents regarding individual items that improve quality can be found, yet statistical modelling demonstrates country-specific models best explain quality improvement/performance relationships. This suggests culture-specific quality improvement models are necessary to better understand how quality may be improved globally.

Judgmental adjustment of forecasts: A comparison of methods

Abstract Attention has recently been given to combinations of subjective and objective forecasts to improve forecast accuracy. This research offers an extension on this theme by comparing two methods that can be used to adjust an objective forecast. Wolfe and Flores (1990) show that ARIMA forecasts can be judgmentally adjusted by analysts using a structured approach based on Saatys analytic hierarchy process (AHP). In this study, the centroid method is introduced as a vehicle for forecast adjustment and is compared to the AHP. While the AHP allows for finer tuning in reflecting decision maker judgement, the centroid method produces very similar results and is much simpler to use in the forecast adjustment process.

Automatic feature identification and graphical support in rule-based forecasting: a comparison

Abstract We examined automatic feature identification and graphical support in rule-based expert systems for forecasting. The rule-based expert forecasting system (RBEFS) includes predefined rules to automatically identify features of a time series and selects the extrapolation method to be used. The system can also integrate managerial judgment using a graphical interface that allows a user to view alternate extrapolation methods two at a time. The use of the RBEFS led to a significant improvement in accuracy compared to equal-weight combinations of forecasts. Further improvement were achieved with the user interface. For 6-year ahead ex ante forecasts, the rule-based expert forecasting system has a median absolute percentage error (MdAPE) 15% less than that of equally weighted combined forecasts and a 33% improvement over the random walk. The user adjusted forecasts had a MdAPE 20% less than that of the expert system. The results of the system are also compared to those of an earlier rule-based expert system which required human judgments about some features of the time series data. The results of the comparison of the two rule-based expert systems showed no significant differences between them.

A framework for the combination of forecasts

A framework for the systematic study of the combination of sales and market forecasts is proposed based on the types of forecasts to be combined and the methods used to combine them. A detailed survey of the literature is given in terms of the developed framework and general conclusions about the combination of forecasts area are developed. Some future needs for research are also discussed.

Use of cost and accuracy measures in forecasting method selection: a physical distribution example

Abstract A difficult inventory control decision is that encountered by electronics warehouses which must stock a large variety of items in a rapidly changing, high cost industry. Electronic component distributors face high variability in demand, a lack of sufficient historical data and short product life cycles. The selection of accurate forecasting techniques for such a data set is of major importance. Four forecasting approaches were tested. They include single exponential smoothing with different smoothing constants as well as double exponential smoothing, adaptive response rate exponential smoothing and median of the historical data as the forecast The selection process requires the utilization of an appropriate metric. In this study, in addition to the traditional accuracy metric an added criterion, the use of an asymmetric economic measure of forecasting accuracy is proposed and tested. The forecasting methods utilized accuracy and economic measures, with a large data set. The different measures yie...