Predicting the future -A case study of Volvo CE's forecasting process

Abstract

Forecasting has today become a key success factor for companies with long lead times. Resources and capabilities within a company have to be managed in an optimal way, which requires prognosing fluctuations in future demand.

In this thesis we examine corporate forecasting processes i.e. how corporations make their forecasts and what they base these forecasts on. To do this we look into the current forecasting process of a case company, Volvo Construction Equipment, to map techniques and methods used when developing forecasts, as well as information requirements and weaknesses in Volvo CE's process.

We have identified four theoretical approaches that we consider the four cornerstones of a complete forecasting system. The theories are the traditional forecasting theory, customer purchasing behavior, institutional analysis and management information systems.

We have also given special attention to forecasting using leading indicators. We attempt to create a structured and methodological way of identifying indicators in a company in the construction equipment industry. For this purpose we have developed a non-mathematical model based on the four theories mentioned above.