eThesis - School of Business electronic theses

» hse_ethesis_12569.pdf   size:2 MB (1171997)

New product introductions have become necessity for many companies. The business environment has changed to be more competitive and customers more demanding therefore in order to stay profitable and in business many companies introduce new products continuously. New product forecasting is a challenging part of new product development since forecasting is about predicting consumer preferences and market trends. New product forecasting is an interesting research subject since it involves several variables.

Objective of this thesis is to provide a comprehensive understanding of forecasting challenges with the focus being new product forecasts. The aim is to discover factors which help in developing quality forecasts, in other words forecasts which are both accurate and creditable. Another research goal is to gain knowledge how to increase forecast quality. A comprehensive literature review was conducted about forecasting, new product forecasting, and forecasting in the textile industry. The empirical research was conducted as an explanatory qualitative study. Semi-structured interviews were used as the research methods since they provided the best way to discover the attitudes and practices of business professionals. Representatives from four Finnish companies operating in the textile industry were interviewed to discover how forecasts are created in the companies they work at and to gain understanding of the overall state of forecasting in these organization. Also the researcher wanted to assess how well the recommendations provided in the literature review correspond to the actual company practices.

The research discovered that the practitioners understand the importance and challenges of forecasting. Most companies create forecasts based on collaborative efforts of multiple departments instead of using a forecasting system. Receiving orders from customers before final forecast decisions are made is preferred. This is not always possible however many of the companies were working on finding ways to make this possible. Some of the main factors which contribute in the creation of quality forecasts are experienced sales personnel and knowledge of the products, customers, and the market. Ways that the quality of the forecasts could be increased included availability of customer orders, conducting market research, and analyzing and utilizing historical demand information. The recommendations provided in the literature review, creating a forecasting process which emphasizes monitoring and evaluating corresponded fairly well to the way the practitioners viewed forecasting. Forecasting is a critical function in all the companies however availability and usage of historical demand data and evaluation of forecast error was not systematically used to help in forecast creation. These aspects could be improved by unifying the forecasting practices to enable collective comparison of the forecasts and also to enable easy access to view historical demand data.