Is Sales Forecasting Worth the Effort?
Sales Forecasting is something that I have spent many years preparing and at least every quarter I ask the question “Is Sales Forecasting worth the effort?”. Let’s face it regardless if you are a large or small business, sales forecasting can be pain and the bigger you are the higher the stakes. A lot does depend on your sales forecasts, Sales, Cash, Stock, Profits. Could it be a lot of effort expended for very little return?
Over the years I have gone through something like the following process for my sales forecasts:
1. Field Business developers provide a forecast usually with reluctance and on in excel or the aging company reporting format. Usually on the low side for all the obvious self serving reasons, such nice people.
2. Sales Department (Manager) uplifts or adjusts the sales forecast, using own special intuitive feel for sales.
3. Then the Sales Director does the same things adding - subtracting the data accordingly. Sometime for genuine reason based on new products or advance knowledge of proposed new marketing activity. By this stage we are at the 3rd iteration of the same basic field data.
4. Demand Management, Sales and operations planning, Marketing adjust the plans further because of experience local knowledge whatever. Maybe even some research analysis they have just bought.
5. There is another step here now which maybe Finance, CEO, Manufacturing Director who adjust forecast all of whom have their own personal take on the data. And so it goes on.
Is this process useful or just a waste of effort? Or would it be easier to look directly at the data and forecast based on the real sales patterns in the sales data. Obviously Fashion, Capital equipment are harder to project here but patterns can still be trapped and extrapolated meaningfully.At least as meaningfully as the process steps outlined above.
What do you think? Is sales forecasting worth the effort?
