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Sales Forecasting and Demand Management
The process © The Delos Partnership 2005
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Forecasting Needs a Simple Process
Capture History Analyze History Execute Forecast Review Commercial Plans Review Exceptional Demand Hold Demand Review Assumptions written down and agreed C O N S E N S U S F O R E C A S T © The Delos Partnership 2005
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© The Delos Partnership 2005
1. Capture Actual Each month we capture Actual History Captured from Order Entry Software - shipments © The Delos Partnership 2005
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Forecasting Needs a Simple Process
Capture Actual Filter Demand Execute Forecast Review Commercial Plans Review Exceptional Demand Hold Demand Review Assumptions written down and agreed C O N S E N S U S F O R E C A S T © The Delos Partnership 2005
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© The Delos Partnership 2005
2. Review Actual Demand Look for unusual shipment, not going to be repeated Competitor going out of business Unusual promotions Millennium bug Mistake Beware spike caused by stock outs Aug 5035 Sept 6040 Oct Stockout Nov 5750 © The Delos Partnership 2005
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Forecasting Needs a Simple Process
Capture Actual Filter Demand Execute Forecast Review Commercial Plans Review Exceptional Demand Hold Demand Review Assumptions written down and agreed C O N S E N S U S F O R E C A S T © The Delos Partnership 2005
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3. Execute Statistical Forecast
Forecast should use history to produce trends and identify patterns Key influences to be detected : Base Trend Seasonality © The Delos Partnership 2005
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Forecasting Needs a Simple Process
Capture Actual Filter Demand Execute Forecast Review Commercial Plans Review Exceptional Demand Hold Demand Review Assumptions written down and agreed C O N S E N S U S F O R E C A S T © The Delos Partnership 2005
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Sales Forecasting: Inputs
New Customers New Products Pricing Initiatives Advertising And Promotions Cannibalisation Customers Own Forecast Competitors Activity External Factors © The Delos Partnership 2005
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Sales Forecasting: Inputs
New Customers New Products Pricing Initiatives Advertising And Promotions Cannibalisation Customers Own Forecast Competitors Activity External Factors Marketing Plans © The Delos Partnership 2005
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Forecast must be supported by Assumptions
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 1254 145 156 170 135 160 1345 167 180 200 150 1256 100 300 1347 50 40 30 20 NUMBERS ! ASSUMPTIONS © The Delos Partnership 2005
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Management of Innovation
Stage/Gate Process Formal Process for Managing Project Stage 0 Stage 1 Stage 2 Stage 3 Stage 4 Gate Gate 1 Gate 2 Gate 3 Gate 4 Review Investigate Financial Case Develop Test Launch Forecast Reviewed here For accuracy Forecast Entered into System to drive MRP Mimics © The Delos Partnership 2005
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New Product With Pipeline Fill Forecast
© The Delos Partnership 2005
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Demand Creation & Sales Planning
ADVERTISING AND PROMOTIONS The planning of the promotion can be precise The impact of the promotion is imprecise Assumptions need to be recorded © The Delos Partnership 2005
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Promotional Curve Analysis
© The Delos Partnership 2005
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Get Input From Customer’s Plans
Will require understanding of Customers Plans Needs effective Sales Planning Process May be linked into Customer Replenishment Planning Process © The Delos Partnership 2005
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Forecasting Needs a Simple Process
Capture Actual Filter Demand Execute Forecast Review Commercial Plans Review Exceptional Demand Hold Demand Review Assumptions written down and agreed C O N S E N S U S F O R E C A S T © The Delos Partnership 2005
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Pre-Planned Epidemic Forecast
© The Delos Partnership 2005
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Sales Forecasting Review Exceptional Demand
Review large potential business Large New Customers Big new market New products Large one time demand Decide whether to include in forecast or not Avoid probabilities Decide on hedging strategy Agree on acceptance of risk © The Delos Partnership 2005
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Forecasting Needs a Simple Process
Capture Actual Filter Demand Execute Forecast Review Commercial Plans Review Exceptional Demand Hold Demand Review Assumptions written down and agreed C O N S E N S U S F O R E C A S T © The Delos Partnership 2005
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Hold Demand Review Meeting
Review changes Agree assumptions and changes Review products Review customers Review NPD activities Review KPI’s Sign off the forecast © The Delos Partnership 2005
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Customer Relationship
Demand Planner Plan Strategy System Forecast ERP System Customer Relationship Manager Sales and Marketing Manufacturing And Purchasing Consensus Forecast © The Delos Partnership 2005
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Typical Role of Demand Planner
Co-ordinates External Plan Responsible for Demand Plan Review the all of the numbers Challenge not changes the External Plan Work with Availability Planner Works with Sales and Marketing Influences Customer Service levels Inputs on Safety Stock policies Facilitates decision on customer allocation Manages the Sales Planning system Manages the Sales Planning process Enforces good behaviours © The Delos Partnership 2005
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