Demand forecasting

Budgeting forecasting

Sales and operations planning

Sales and operations planning, Budgeting forecasting

Going beyond the short term horizon there is a need for forecasting for sales and operations planning and budgeting. The emphasis switches from the short term maximisation of existing resources to the longer term planning of essential new capacity and other resources.

Methods for medium to long term term demand forecasting

Demand forecasting over the medium to long term tends to require a somewhat different approach to the short term forecast. New product programmes can have significant implications for production or supply resources. Considerations of product life cycle can become more important. When forecasting for sales and operations planning it is usually more appropriate to work on the forecast at a high level of product/customer aggregation and in time buckets of months or quarters rather than days or weeks. 

In terms of modelling demand patterns over the medium to long term, curve fitting methods assume greater importance than in short term planning.  In certain markets, including pharmaceuticals, curves to reflect the product life cycle are very useful.

Consideration of cause and effect due to factors such as relative prices and economic indicators is likely to be relevant and if total market data exists it may be beneficial to begin with a total market forecast, then superimpose the market share projection.

Sales and operations planning and the financial overview

Whereas the purpose of short term demand forecasting is usually focused on volume at the most detailed level of product or product by customer, it will be more important in the medium to long term forecast to work at a more aggregated level and to evaluate the financial effects of the plan in terms of revenue and margin.

Forecast Solutions can help facilitate the sales and operations planning process by creating the sales forecast making best use of available techniques, then supporting the steps needed to balance supply and demand over the medium term horizon. Powerful software supports the formulation of the initial forecast and subsequent forcing of the result top-down at any level of aggregation across products and customers.