Operation Management

OperationManagement

OperationManagement

Amazon.comis one of the many organizations that utilize forecasting to provideinformation on the future demand. It invests greatly in research anddevelopment to gain efficiency and reduce costs in the supply chain.Amazon.com is well known for its accurate demand forecasting data(Brennan,2014).Its natural advantage in supply chain planning makes it the bestdemand forecasting company. It develops a sophisticated algorithmthat consist past data such as prices, similar products, promotion,among others attributes to forecast the demand for a product. Theforested information establishes labor plans, weekly inventory, aswell as predicts the financial performance of a company. Amazonrelies on qualitative assessment and quantitative data to forecast.Market research, grassroots forecasting, and Delphi are some of thetypes that Amazon.com use to make forecasts.

Firstly,Amazon.com uses market research technique. At this point, theyconsult current and potential customers and inquire theirpreferences. According to Brennan(2014),they use the obtained information to make accurate predictions aboutthe scope, size, and the future buying habits of a product orservice. Market research comprises of panels, interviews, andsurveys, in which they all give subjective and qualitativeinformation.

Further,Amazon.com uses grassroots forecasting technique. Here, the salespeople create a deep relationship with their customer, and they tryas much as possible to comprehend their customer base. However, thismethod requires sophisticated and sales force knowledge. The salesmanager investigates what is likely to sell in the future accountingperiod and then add those values to come up with an overall forecast.

Delphitechnique is another technique that Amazon.com uses. This method usesconsensus approach whereby a group of expert discusses their views ona particular product or service. However, to remove cult ofpersonality, the experts fill out surveys and questionnaireanonymously. Then, the analysis team reviews their feedback as theymake applicable changes (Brennan,2014).The process repeated several times until they come up with aconsensus forecast.

Reference

Brennan,M. (2014). Supply Chain Management. Retrieved October 29, 2015, fromhttp://cmuscm.blogspot.co.ke/2014/01/amazon-to-apply-demand-forecasts-to.html