1. Forecast at the right level.
Sales Forecasting accuracy can be greatly improved by deciding on the right level to sales forecast at. Is a forecast at SKU level appropriate? In many environments it is not and greater detail must be made available by segmenting history and forecast by channel, sales region, or even customer. In other cases companies are currently forecasting at customer level when a more accurate forecast could be achieved with less effort by working at a higher level. Send us your sales history for real demo
2. Review forecasts at aggregate levels
When reviewing item level forecasts it is all to easy to "pad" each item's forecast just in case. It is not until the item level forecast is aggregated and reviewed at a brand or product category level that the cumulative effect of this "padding" is exposed in the form of a clearly unachievable growth in forecast over history. Aggregate level forecast review is an essential part of the forecast review process because it allows for a "sanity check" of the forecast compared to history and preferable company budgets. Any anomalies must be identified and corrected before putting the forecast into the inventory planning system.
3. Review forecast by exception
20% of your products are the important ones so why not use ABC analysis to focus on the products which are most important first while the mind is still fresh? Why not use deviation filters to identify the few products in the database which have unusually high or low trending forecasts when compared to history? Survey
4. Measure and report forecast accuracy
MXI Forecast Pro UK (Free Trial available) allows you to review and report on forecast accuracy as required. 100 Standard reports offer analysis to help you identify weak areas and opportunities for forecast accuracy improvement.
Success breeds success
A forecasting process will rarely be successful if the progress is not measured and the results reported to all participants. Take advantage of the functions available and start your forecast accuracy graph this month. Let everyone know how "good" or "bad" they are doing and what progress they have made over time. Success breeds success. Contact us now
SAVE YOUR FORECAST EVERY MONTH
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Demand Planners, Sales and Operations planners, Sales Forecasters are always interested in how the Forecast Pro uses data sourced from all over the organisation. Demand Managers are constantly trying to improve the accuracy of forecasts using budgeting and forecasting software. They want to reduce the use of spreadsheets and in particular focus on the most inaccurate forecasts. Many item forecasts with low volumes and patchy turnover can be as low as 20% accurate.
If you are running a large Retail, Distribution or Manufacturing company you might have data produced from your Trend purchasing screen supplied as part of their ERP Software suite. This data is also produced by a Manufacturing MRP output report after Materials requirement planning is completed. You can automoate link file so this data is pushed into Forecast Pro where the Forecast Pro expert selector operates.
Forecast Pro examines the data (each line or item) and then selects the most appropriate statistical forecasting methodology for each individual item on the list using such forecasting methods such as Holt Winters, Exponential smoothing. It's important to appreciate this point as spreadsheets simply use the same very low tech forecast approach for everything.
What should happen next is that the Forecast Pro user will having satisfied themselves that the forecast is satisfactory will push the data towards the Purchasing & Logistics department.
We have customers who improved accuracy on fast moving parts with good sales histories by as much a 8 % almost immediately and as much as 30% in the short term on hard to forecast slow moving parts.
And remember whatever you do don't just leave Forecast Pro run in the corner unattended, friendless and all alone. It's an everyday product which can continuously improve forecasting accuracy into the future. Become a friend of Forecast Pro by trying Forecast Pro for yourself at no charge. Click here for more details: Forecast Pro
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Forecast Pro Trac is the latest version of the Forecast Pro family and it's ideal for demand forecasting, demand planning, demand management, sales forecasting, item level planning, sku forecasting. Easy to use, light years more advanced than spreadsheets and enjoys award winning status for its statistical forecasting accuracy and is much less expensive than many of the alternatives.
MXI Forecast PRO UK combines forecasting, management reporting, graphing, reporting and adjustment capabilities as found in Forecast PRO unlimited. However Forecast PRO TRAC also provides easy to understand data graphics business intelligence that concentrate attention on the MAPE to drive forecasting accuracy improvement.
Forecast PRO uses will be able to select non performing forecasts and specifically concentrate attention on forecast accuracy. For example a specific exception report in the business intelligence selector allows users to select forecasts which are greater than 50% out against actuals and concentrate on them.
Forecast Pro TRAC allows you to view your data and forecasts in as many units of measure as you need. A drop down menu lets you select for example.
Rearrange your hierarchies.
With Forecast Pro TRAC's powerful "shuffling" capability, you can rearrange hierarchies with just a couple of clicks. Generate reports showing product-level forecasts broken out by customer and the
Forecast Accuracy, Identify SKU, pruduct groups which need attention
With Forecast Pro TRAC's flexible exception reporting, you can automatically flag exceptions, saving you from having to manually review a long list of items
Statistical forecasting accuracy improvement
Forecast Pro TRAC maintains an archive of your previous forecasts (both statistically-generated and adjusted forecasts) so that you can compare and contrast previous forecasts to what actually happened.
Consolidate your team's forecasts.
Forecast Pro TRAC breaks large forecasting projects into smaller pieces that can be worked on separately and then reassembled into consolidated forecasts. For example, if three demand planners are responsible for forecasting three different geographical territories, they can work on their forecasts separately; after they're done, their consolidated forecast can be further manipulated.
If you are still using Excel, download our free whitepaper on the true cost of Excel: True Cost of Excel
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MXI specialists in the UK/Ireland sales budget modelling software. MXI advises organisations on forecasting, financial and sales modelling to plan and monitor corporate business performance. MXI advises on the intricate process of compiling plans and budgets. Thats why MXI should your first call for any sales budget modelling in the UK.
At MXI we offer tailored training to financial and non-financial staff to support any financial or sales modelling requirements that you might have.
Beneath are listed some of the major issues that MXI clients have found in building a UK sales budget, 5 year forecast, projected cash flows for the UK/Ireland corporate sector.
- Period for modelling 1 year, 2 years, 5 years. The norm is 5 years.
- Weekly monthly quarterly financial periods
- Identify key business drivers in business (This changes constantly)
- Product, service offerings, 10, 20 Product Groups
- Income flow from Sales, Standard debtor days patterns (Impacts Cash Flow, profitability, rolling forecasts)
- Target Market penetration, unit sales volume, seasonality product by region by month
- Customer churn rates (subscription-or licence products & services)
- Revenue calculation parameters - sale prices by product by region by year, flat fees Vs user-based fees, etc (There will be huge variations within the revenue calculation module, depending on type of business, product characteristics, etc.)
- Revenue share % where distribution is via business partner.
- Recurring revenue models where % based maintenance fees apply - e.g. second and later year fees for software products/services
- Additional revenue streams - e.g. after-sales service offerings, product upgrade options, etc
- Direct costs - % of turnover or fixed value by product by region by year
- Other % based expenses
- One-off expenses by month Salaries, Consultant fees, personnel budget
- Salaries, months of commencement and yearly salary review levels
- Other expenses, months of commencement and yearly increase or reductions.
At MXI we understand the challenges of accurate forecasting thats why we are offering a 30 day trial of our budget and forecasting as used by JP Morgan, Bank of America, Caterpillar and KRAFT-Cadbury. Request Here: QUANTRIX TRIAL
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Forecast pro in the UK is helping British companies to plan and forecast international sales and purchasing. Forecast PRO is used 2000 plus companies throughout the UK. Users include UK Treasury, BP, Coca Cola UK, Shell UK.
DOWNLOAD Forecast PRO TRIAL NOW:
Start using Forecast PRO in the UK, download Forecast PRO from the mxisoft.co.uk website. Prospective buyers can check UK/Ireland pricing on our pricing page.
Forecast Pro is easy to use as it allows users, companies, organisations without any knowledge of statistics to benefit from statistical forecasting. All you need is series data (sales data, purchasing history, incidence of cancer cases) in a spreadsheet. Forecast PRO connects for example to your UK/London Sales data or mortgage defaults in Scotland/Wales and does the maths and the statistics for you.
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That's why Mark Smith, UK Treasury Financial Analyst, says "Forecast Pro is an invaluable and essential part of the tool set we use to predict UK regional Tax returns for the Chancellor". Caterpillar UK uses Forecast PRO to predict the demand for high value spare parts.
500 Forecast Pro in UK/Ireland Food sector can't be wrong, managing promotions, special offers, supply chain pressures, demand management and planning, sales operations & planning issues. Forecast Pro is helping the British food Industry work profitably with the ferocious supermarkets
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Exception reporting is ideal where the data volumes are huge and improved accuracy. Look into the really serious issues first sorting the data by priority. 1000's or 10's of thousands of items to manage.
This expert statisical forecast from Forecast PRO shows 6 items requiring attention as they have changed more 25% since the last time Forecast.
To see and discuss FORECAST PRO - Contact MXI.
Forecast PRO selected a forecasting method to generate a sales forecast. The Business Intelligance within Forecast PRO simply highlights the SKU/items where some attention is required. The Supply Chain people or Sales & Operations planning guys can focus on the issues at hand here.
FORECAST PRO - Brochure Page & Case Studies
The Forecast can be different to the actual recorded sales data or simply last statistically generated sales forecast. Either exception method is fine. Another benefit here is that some thought can be put into your planning approach such as using a different statisical planning method (trendline, box jenkins, exponential smoothing) in Forecast PRO.
Monitoring within-sample error statistics such as the MAPE and MAD. This type of exception reporting is often misused by individuals who assume that large within-sample errors indicate poor forecasting models-usually they don't. In fact, large within-sample errors reflect scale and volatility of the data rather than the accuracy of the forecasting model. Highly volatile data sets always produce large within-sample errors because they are volatile-not because the forecasting model is doing a poor job. Similarly, high-volume series generate larger MADs (unit errors) than low-volume series because they are higher volume-not because the forecasting model is inferior. Thus, monitoring within-sample statistics can be useful to understand the scale and volatility in the data, but since it is not monitoring the actual forecasts, it is not very useful in terms of finding potentially poor forecasts where action may be needed.
Selecting Thresholds?
The above example selected 6 items where the forecast differed by over 25% its previous forecast. Obviously a lower threshold of 10% would generate more exceptions and 50% far fewer for manual intepretation. The planners then intervene accordingly changing the item/reporting group forecast to manually adjust.
There is a cost to reduced thresholds-managing additional false positives requires time and resources and does not improve the final forecast. There is a benefit to reducing thresholds-they somtimes generate additional true positives as taking action improves forecast accuracy & saves money. Thus, the thresholds need to be set to values that balance the cost of reviewing the false positives with the cost of missing true positives.
Expermenitation is the best way to develop this iterative planning process which will improve item level accuracy.
It is not a universal solution either. High-value items warrant lower thresholds (and thus more weeding through false positives) than lowervalue items owing to the higher cost to missing the true positives. Best forecasting practice is to categorise items based on their importance and vary the thresholds for different categories accordingly.
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The ECB and Bank of England are keeping rates low, business confidence sags, spending over Christmas lagged seriously not a even a drink could cheer us up we didn't buy any. It's likely that conditions economically are going to remain challenging that delightful phase that slipped into our conscience a decade or two ago.
You can't cut buck the market, you have to cut costs and give the public what it wants when it's ready. And better forecasting is the key.
If we saw a man digging a hole on the road using a beach bucket and spade we would all say he needs a Jackhammer! So why do so many use Spreads***ts for business planning, time series forecasting, modelling, sku sales forecast, inventory predictions, production management, MRP purchasing decisions, trending, seasonality and sales promotions.
Bob the Builder has all gear he needs so why don't you. If you are responsible for managing stock, purchasing, sales projections, demand management, demand planning, forecasting times to stop using s****she**s.
Sales and Operations planning support organisations to deploy resources efficiently and most importantly cash. No point having the spare part in Stockport when it's needed in Shanghai or Spokane in the morning. If it's going to be hot holiday week end, we need lots of Beer, Ice Cream, lettuce, charcoal, gas, beach gear. No good telling the boss Tuesday stock will be in Wednesday.
Forecast Pro is the most successful computer forecasting application ever written. 50,000 licenses sold users such as IBM, Diageo, Ford, BMW, Sony, and hundreds of smaller companies. It does the exponential smoothing, holt winters, extrapolations, using an expert selector. It does the projections you handle business.
We at MXI understand accurate forecasting thats why we give you the chance of a 30 FREE trial. Request your download.
Forecast PRO compared to Spread*****s. Some Facts
- Faster & Accurate first time.
- There is only one methodology in a spre******t, Trendline and it is the least reliable.
- Forecast PRO has 20 and an expert selector.
- 3 time PC Magazine Editors Choice and multiple Insead awards for accuracy
Use MXI Forecast Pro Supply Chain technology. Forecast Pro will improve your sales & operations planning, demand planning, sales forecasting. Users include Johnson & Johnson, Siemens, SIEMENS, UK Treasury, Caterpillar, Irish Airports Authority.
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Nothing like an old fashioned gag to highlight a a truism and it's certainly true to say too many serious business decisions are made with the aid of spreadsheets. Leading British magazine The Economist implicates spreadsheets for the part they played in the international credit crisis.
In talking with prospective customers for our budgeting, modelling, forecasting and analytics products, people say well "We have been using spreadsheets for years, the work is done and the spreadsheets were free with the PC, it would be a waste of money to revisit this ." Or words to this effect.
Understandably they feel this way as there has been a lot of time invested in the spreadsheets.
Mistakes - There is lots of evidence that Spreadsheet are not fit for purpose. Errors in formula's, links to worksheets and too much cut and paste. Many financial market observers (Investors, commentators, Pension Funds) are very surprised to learn that the Markets were using spreadsheets to analyse, control and price risk.
Communication - Spreadsheets are essentially personal yet many organisations are sharing Spreadsheets. The possibility of error grows exponentially as the number of users climbs. Spreadsheets are not easily understood or well documented. It's well known that users force data, change formulas to get things done. And then forget (deliberately or otherwise) to advise these changes properly to others. Some organisations go through very expensive and time consuming spreadsheet re engineering when users leave organisations.
X & Y - Spreadsheets have 2 dimensions only. Above and Across that's it. One line of data down the side and across the top that's all. Most people want to see far more information than that. For example, sales by product, region, customer, year and month. That's very limiting and prevents productive number crunching.
Cost - It is very surprising but most companies have not costed the time spent generating, using, fixing, tracing errors in spreadsheets. In most cases it will far exceed the cost of an investment in a system. Why should using a spreadsheet be exempt from normal performance metrics. If there were used for manufacturing widgets they would have gone long ago!
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Business Forecast Systems in Boston has released the TRAC variant of its Forecast PRO software series. If Forecast PRO were a BMW it would be the 7 Series.
Users such as Toyota, Siemens, IBM, Coca Cola who already use FORECAST PRO for expert statistical forecasting can accellerate and deepen their use of Forecast PRO seriously. TRAC will let them tackle problem forecasting issues quicker and more intensively to meet demand, reduce cost and increase sales.
Forecast PRO TRAC allows all sorts of organisations examine their demand understanding it better and faster. Once the forecasts are agreed by everyone, the results are then integrated into the main Sales/Purchasing forecast and loaded into the ERP system.
Many Sales and Operations Planning, Sales and Supply Chain people find the forecasting element of their job difficult, tedious and boring. Yet getting some accuracy into the projection could be worth millions. Usually there is already a Spreadsheet based planning process which is a derivative of the main ERP System. Spreadsheets are known not to be very accurate.
TRAC hits the sweet spot where an organisation is struggling to meet the planning/demand management/sales and operations planning/ forecasting needs of the business.
TRAC produces statistically accurate forecasts for 1000's of product items instantly (it should do after 20 years), Products Groups, Customers, Territories. Using its new features Forecast PRO TRAC helps planners using the latest TRAC technology and features to improve the accuracy of the entire process dramatically.
TRAC targets the problem predictions, demand planning issues and forecast's much more quickly, accurately hopefully bring the less accurate forecasts upto the level of other better forecasts.
The new Watefall report, demand management capabilities, MAPE reports and Graphical reports afford users the same benefits statisticians enjoy. Greatly improving the Sales & Operations planning, forecasting function within the business.
In an organisation with sales of 100 million this improvement could amount to several million in the first year.
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