Benefits
Good sales forecasting delivers the following benefits:
-
A realistic view of future revenues
-
Improved planning of resources to meet customer need
-
Better control of inventory levels
-
Alignment between Sales and Operations groups
-
Tracking of performance against forecast, leading to continuous improvement
-
Ability to reduce costs by sharing forecasts with suppliers
-
And more...........
To discover how Forecasting can benefit your business, contact Altimus for a
free consultation.
In a Nutshell
Sales forecasting is simply the desire to predict the future! There are
broadly speaking 3 approaches to the sales forecast:
-
Get your sales people to tell you
-
Run prediction algorithms to get the past to tell you about the future
-
A combination of 1 and 2
Where there are relatively few products/services and a sales person has
relatively few accounts approach 1 by itself has a chance of working. The
second approach is generally suitable where long term demand can be accurately
modelled and linked to broader economic factors.
As the number of products or services and customers increases most companies
face a tension between Sales and Operations. Sales generally want to
forecast in value terms at as high a level as possible (eg for the customer)
for the quarter; whereas operations generally want volume forecasts at as low a
level as possible (by product, customer, and week or month). Sales people
generally want to spend their time selling, not predicting what they are going
to sell and operations need the details to make sure they can deliver. In
these circumstances, and with the vast majority of the customers we work with,
approach 3 works best.
The key to success is to get the balance right with what customers and products
or services can be forecast using systems, and which would benefit from the
intervention of sales people. Getting this balance right by correctly
assessing the options, putting together processes to extract best value from
systems and people, and choosing the correct forecast algorithms is a
challenging task, but one that can yield excellent results. For example
with one of our customers we achieved a 5% reduction in inventory whilst
improving stock availability by 25%.
|
|
|