Why Sales Forecasting Is Important...

Given the dramatic consequences that can result from the wrong predictions… it’s pretty much so..but how to do this…

Superforecasters constantly update their information and adjust their predictions (and their beliefs) accordingly and that they work better in teams.

Leaders across the spectrum are making decisions every day based on what they believe is going to happen...

First Aid is on its way with a survival kit: 

From Active Open-Mindedness to Teams by Tetlock and Gardner

Surprising insights into the mistakes and assumptions that undermine even the best of minds. One important and seemingly obvious (and yet so elusive) element required for accurate predictions is active open-mindedness — in other words, not building the answers based on one’s assumptions and biases. For superforecasters beliefs are hypotheses to be tested, not treasures to be guarded.

 Another element required for superior predictions is a tendency toward probability. Many of us ignore probability more than we might realize. When the weatherman says that there is an 80 percent chance of rain the next day and the next day is sunny, the weatherman was wrong — or so we think. In truth, there was a 20 percent probability of a sunny day. The next day fell into that probability. Superforecasters think in terms of percentages, not yes, no or maybe.

Sales Forecasting’s’ Impact

Sales forecasting is a key element in conducting your business. The realism that good forecasting provides can help you develop and improve your strategic plans by increasing your knowledge of the marketplace. The forecast that your sales force provides is the source of information that allows you to manage virtually all aspects of your business.

Sales Planning: When your sales reps make their forecasts, they are also planning their future activities, providing each of them with a business plan for managing their territory. Assuming that each of them has a quota to fill, forecasting is the tool that helps them identify the customers to meet their objectives.

Demand Forecasting: The sales forecast is your best tool to get a good estimate of the demand for the products you sell. Your sales team is the front line for your business and best positioned to gather information about anticipated demand.

Higher OTIF Delivery: With accurate sales forecasting, you can achieve a higher rate of on time in full, or OTIF, delivery. The information from sales forecasts guarantees that sufficient product will be manufactured or ordered to service customers on a timely basis, resulting in happier customers and fewer complaints.

Inventory Controls: The more accurate the sales forecast, the better prepared your company will be to manage its inventory, avoiding both overstock and stock-out situations. Stable inventory also means better management of your production.

Supply Chain Management: When you can predict demand and manage production more efficiently, you also have better control over your supply chain. This affords you the opportunities to manage resources and take full advantage of just-it-time ordering.

Financial Planning: Anticipating sales gives you the information you need to predict revenue and profit. Having good forecasting information at your disposal also gives you the ability to explore possibilities to increase both revenue and net income.

Internal Controls: Having a gasp on the projected production rates for your business makes it possible for you to have better control of your internal operations. By anticipating future sales you can make decisions about hiring – permanent or temporary – marketing and expansion.

Continuous Improvement: Continuous improvement is a goal of many if not most businesses. By forecasting sales and continually revising the process to improve the accuracy, you can improve all aspects of your business performance.

Price Stability: With solid forecasting, the good levels of inventories that you maintain will prevent the need for panic sales to rid your business of excess merchandise. Sales may be managed on a thoughtful planned basis.

Marketing: Sales forecasting gives marketing an advanced look at future sales and offers the opportunity to schedule promotions if it appears sales will be weak. In extreme cases, sales forecasts may lead to discontinuing slow-moving products.

 Enjoy the read! - It’s up to You! Curious? ….Click Away

 Paul Van den Brande Co-Managing Partner @ Noble House

- Any opinions expressed are those of the authors.

Published by #NHGBe 2022-05-31 -Be-Time 12:30 AM

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