Sales forecast is an estimate of how much of a product or service will be sold in a certain period of time. In this article, you will learn about the reasons and benefits of making this forecast, as well as to differentiate it from demand planning.
Main Reasons for Making a Sales Forecast
- We live in a work environment with a very changing and uncertain market, therefore, we need tools that help us plan and make decisions.
- We can stop "assumption", since it does not provide statistical analysis or real data.
- Improve our planning
Sales Forescast Benefits
- It helps both Management and Production area to make better decisions (Master Production Plan), Purchases and Sales.
- We can make a projection with different future scenarios.
Aspect to Consider When Forecasting
- Seasonality: Phases of the year where the demand usually increases or decreases, depending on the product
- Installed capacity: Business limitations, such as production capacity, investment, supply, personnel, etc.
- Goals: The company's sales objectives, aligned to a budget and considering the limitations of the business.
The sales forecast is the first step in the Planning Demand. After doing it, one must also include strategies to launch new products and campaigns in the Marketing area. At this point it is essential to involve the areas of:
- Human Resources
To assess the possible limitations and the resources that will be requiered.
It is very important to make a sales forecast correctly, since that is where the production budget, personnel requirements and the budget for purchases or inputs come from.
Demand Planning at Casa Sauza
Demand Planning allows us to:
- Manage material requirements in advance
- React quickly to changes that may arise in the demand
- Improve the control of our inventories
- Optimize distribution activities
- (As a result of the above) Improve our level of service
At Casa Sauza, we have a Demand Planning aligned with the objectives of the Commercial team. To us, customers and large markets are just as important as developing clients. This has led us to have better control and to immediately identify any deviation from the demand plan, since any change in demand has a direct impact on the planning of the agave, which requires years for its maturation and, therefore, is not so easy to dispose of immediately.
Sales Forecast vs Demand Planning
It is important to differentiate Sales Forecast from Demand Planning: Sales Forecasting is a mathematical estimate of how much will be sold in a given period of time, while the Demand Planning is the integration of the Sales Forecast with the marketing input or the commercial area, considering the trends or events that may affect the behavior of our demand.
Forecasts are not exact, but they do give us tools to consider the projection or behavior of a product or service in a period of time.
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