As the global automotive industry transitions from primarily producing internal combustion engine (ICE) vehicles to including electric vehicles (EVs) and hybrids, we’re witnessing a true transformation. This transformation delivers many benefits, including increased sustainability, but it also creates demand-planning and production-planning challenges.

To profitably serve demand, automakers need to get the product mix right across EVs, ICEs, and hybrids — but they also need to plan precisely by channel and region. Today’s consumers expect and demand more customization. They want to choose not just the engine type, but also the smart features, infotainment functionality and other characteristics that create a unique driving experience.

For consumers, having so many options is amazing. But for automakers, customization creates planning complexity, as they try to accurately anticipate which configurations will match market demand. Getting the mix wrong comes with serious consequences — excess inventory on the one hand, and lost sales on the other.

While a crystal ball is obviously an impossibility, demand planners, production planners, and schedulers do have a critical capability that’s available to help them maximize profitability, customer satisfaction, efficiency and productivity — even amid demand complexity. That capability is accurate, dynamic, real-time forecasting.

Forecast. Plan. Produce. Repeat.

Thanks to artificial intelligence (AI), machine learning (ML), data science, analytics, and advanced algorithms, today’s forecasting solutions are smarter and more precise than ever.

Leading automakers are leveraging the AI-enabled capabilities of the Blue Yonder Platform to produce incredibly accurate, dynamic forecasts. Today’s optimization engines are capable of ingesting hundreds of demand-driving variables — like the consumer price index (CPI), inflation, the gross domestic product (GDP), interest rates, fuel prices, pricing, promotions, current inventory and incentives — and continuously replanning based on this real-time data. The Blue Yonder Platform provides an equally granular, real-time look into supply conditions — sensing and accounting for disruptions like material shortages or supplier noncompliance in advance.

For production planners and schedulers, the demand and supply forecasts generated by the Blue Yonder Platform are the equivalent of that elusive crystal ball. Simply by tying these intelligent predictions directly to global production plans and schedules, manufacturers can profitably serve demand on one hand, while managing constraints on the other.

Of course, in today’s complex manufacturing landscape — with global operations spanning thousands of miles and encompassing multiple tiers of suppliers — that’s no easy feat. It’s hard to consider so many variables simultaneously and approximate the clarity of that elusive crystal ball — especially if planning teams are using manual methods, human analysis and consumer-grade spreadsheets. 

The Blue Yonder Platform capitalizes on AI to ingest forecasts from both upstream and downstream, conduct rigorous analysis and arrive at an optimal production plan in mere seconds. Best of all, its intelligent optimization engines recognize new demand influences and constraints, then replan and re-sequence production in near real time.

Realize These Five Key Benefits

By leveraging the Blue Yonder Platform, with its industry-leading capabilities in advanced production scheduling (APS), manufacturers can realize benefits in five key competencies that are critical for success today:

  1. Dynamic, forward-looking scheduling

The production planning approach used by many manufacturers today can be compared to looking in a rearview mirror. But relying on past performance no longer works in today’s dynamic world, where both demand and supply have become moving targets. Accurate, AI-enabled forecasting gives planners the ability to see into the future, to profitably align customer demand and market trends with the availability of raw materials, component parts, production capacity and other resources. The advanced technology exists to produce intelligent, near real-time forecasts — now manufacturers need to create production plans and schedules that are equally data-driven and dynamic. Modern APS capabilities from Blue Yonder enable them to operate with the agility, speed and flexibility that’s critical for success today.

2. Inventory optimization

Intelligent forecasting enables manufacturers to more precisely predict demand for all products, which means they can partner more effectively with suppliers and internal production teams to optimize inventory levels. Given today’s more accurate forecasting results, both overstocks and shortages can become a thing of the past. Not only does multi-echelon inventory optimization, driven by AI and ML, avoid large capital investments in parts and materials, but it also decreases warehousing resources, container space and waste. Tying APS to a confident forecast enables manufacturers to maximize the return on all their inventory investments.

3.      Improved margins

Today, many manufacturers are producing excess inventory to buffer against demand complexity — but there are both high capital investments and high operating costs associated with this strategy. Just as intelligent forecasting reduces the costs associated with unused materials and finished goods, it also helps manufacturers optimize the use of resources like production labor and assembly lines. Even front-office and customer-facing resources associated with inefficient production and inventory management come with a steep price tag. Accurate forecasting positively impacts the production cycle from start to finish, leading to more efficient, more profitable operations.

4.      Transportation optimization

One of the most feared words in the transportation realm is “expedite.” Any surprise — like stockouts, or products that weren’t allocated correctly — can lead to much higher transportation costs. If forecasting is tied directly to production planning, then all stakeholders — including the transportation team — know exactly where products are going, and when they’re needed. That allows the use of cost-saving strategies like route optimization, round trips, shipment consolidation, and shipping full truckloads versus partial truckloads. Cost-effective logistics is about finding the fastest, most resource-efficient way to move products from Point A to Point B. Accurate forecasting allows manufacturers to make the most strategic, well-informed transportation decisions and quantify the value of different options, as opposed to expediting deliveries on the fly.

5.      Increased customer satisfaction

The benefits of tying the demand and supply forecasts directly to production planning are not just internal. A production schedule informed by near real-time data means customers have a much greater chance of receiving the right product, at the right place, at the right time, at the right delivery cost and by the right fulfillment mode. That adds up to consistently high customer satisfaction, which is getting harder and harder to achieve in today’s hyper-competitive, omni-channel sales environment. If accurate forecasting becomes the basis for enhancing a manufacturer’s operations, logistics and production platforms, then it makes sense that it can drive customer satisfaction — and promote growth and expansion in the short, medium and long terms.

You Don’t Need a Fortune Teller. You Just Need Blue Yonder.

It’s easy for production planners and schedulers to feel helpless in the face of today’s overwhelming demand and supply variability. But the fact is, their company is probably already using AI-powered forecasting solutions. By simply tying demand and supply planning directly to the production plan, manufacturers can see the future much more clearly — and respond with speed and agility as conditions shift.

Modern AI makes this process fast, automated and seamless. And Blue Yonder is the perfect partner because our industry-leading platform spans demand planning, supply planning and production planning. Ready to finally get your hands on that crystal ball — or at least match its accuracy? Reach out to Blue Yonder and learn more about the power of forecast-enabled production planning. Or check out our new report on the value of dynamic, data-driven APS, called “A Guide to Production Planning in Manufacturing Industries.”