Companies review the matter of sales forecasting
for a
number of reasons, but at the heart of it is usually the realisation
that sales forecasting is a critical process that affects business and
supply chain planning throughout the company. Forecast
Solutions is happy to help with any individual
component of the forecasting system, but is also well qualified to
undertake a thorough review of all processes and methods
The first stage
is to
understand the current forecasting system in terms of scope, process
and methods. As well as the mechanics it is useful to
understand
the intent that lead to the current state and the views of all
particpants on the strengths and weaknesses that prevail. In terms of
currently achieved forecast accuracy, this should be measured on a
meaningful basis. A forecast accuracy
health check is often useful at this stage.
Critical
assessment of the
existing system
All parties should then step back and critically assess the current
system. It may be that a process installed with due diligence some
years ago no longer meets the full business need. A system
designed to support short term planning
might not adequately fulfil the
needs of medium term planning
such as that involved in a sales and
operations planning process.
Identify and
test improvements
Potential improvements should be discussed and prioritised. Of great
importance is the organisational and procedural framework within which
sales forecasting will be
carried out. Effective forecasting usually involves many individuals
both inside and outside the business and the necessary collaborations
must be supported by the forecasting process. Proposed changes should
ideally be tested
before implementation.
Implement and
monitor
The agreed changes should be implemented.
Appropriate forecast
accuracy measures should be put in place and
regularly monitored as part of a
drive for continual
improvement. When setting KPIs it is best not to worry too much about
industry benchmarks. Rather, focus on
the accuracy that is currently achieved and strive to improve
steadily over time.
Sales
forecasting software
Obviously there are practical considerations including
the
often large investments that may have been made in forecasting software,
but software should ideally be regarded as a tool to
support sales forecasting, not something that defines the
process. At the end of the day it may be necessary to
consider
additional or replacement software.