For a business to satisfy the demands of its clients, it must understand what they want and how much of it they want. If a business finds a way of predetermining its future, it may be able to come up with a simple and effective production plan. The entire process of understanding and analyzing current and past data to come up with a demand and supply pattern through a scientific and systemic approach is referred to as business forecasting/planning. It may estimate the future demand and supply of your products in terms of monetary value or number of units.
Objectives of Business Planning
Timelines of Business Planning
a. Long-Term Planning
This is a type of forecast designed for a time frame that exceeds three years. This form of forecasting is mainly used to facilitate the planning of long-term projects like capacity planning or expansion planning.
b. Mid-Term Planning
This type of forecast is designed for a time frame between three months to three years. It is often used to facilitate the planning of production and layout plans, marketing and sales plans, capital and cash budgeting plans.
c. Short-Term Planning
This type of forecast is designed for a time frame between one day and three months. It is often utilized to facilitate the planning of the daily inventory plan, production plan and labor workforce scheduling.