Why is Sales forecasting so bloody difficult.
Is accurate Sales forecasting just an illusion?
The short answer is because its not easy, it should be easy take last years activity and add a bit or subject a bit. But New Product Development, Pipeline filling, Product Supersessions, slow moving capital equipment or parts are part of what sales forecasting such a pain. Slow moving parts for obvious reasons there just is not enough data points or activity to build out a reliable forecast. Typically fast moving parts are difficult to forecast partly because people don’t want to assume responsibility. And there is good reason it’s not easy.
Top 4 problems with S&OP Planning
Does Technology or Sales forecasting methodologies work?
Technology can work very effectively where seasonality plays a role or where there is plenty of data points or sales history data. Statistical forecasting software for example can detect evident trends and extropolate same into Sales forecasting. Using popular methods such exponential smoothing or Holt Winters.
In many cases some local knowledge and human intervention can produce an accurate foerecast in minutes, an experienced Sales Manageror Warehouse Manager can see a poor forecast instantly. This Business intelligence drives production, supply chain activity, Sales, Marketing and Sales promotions.
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Get rid of Excel
Excel suits sales forecasting in certain circumstaces. Over time Excel well known tendency to involve error. Use Business intelligence software or sales forecasting software such as Forecast Pro. This will allow you the time to focus on the business issues and not worry about the spreadsheets collapsing.
Serious SKU level sales forecasting demands the full attendion of the business analyst, Demand Planner. Sales and Operations Planning and Finance teams need most accurate sales forecast that can be generated.
Bugdeting Best Practices
Serious Organisations plan for the future and don't expect huge improvement overnight.
Only teenagers, pranksters or liars will cod us into believing that Sales forecasting can improved overnight. It's not possible and organisations looking to improve their forecasting better schedules for incremental improvements over a decent period of time. How quickly, thats usually determined by the resources applied and the seriousness of the intent.