I think that intelligent forecasting (company revenues, earnings, etc.) should not seek to predict what will in fact happen in the future. Its purpose is to illuminate the road, to point out obstacles and potential pitfalls and so assist management to tailor events and to bend them in a desired direction. Forecasting should be used as a device to put both problems and opportunities into perspective. It is a management tool, but it can never be a substitute for strategy.peter cundhill
Mini case study: Coca Cola demand management
Coca Cola’s sales forecasting is managed by the DOIP function, Demand Operations and Inventory Management.
‘Demand’ means talking to Sales and Marketing to understand the latest projections, ‘Operations’ works with production and distribution to manage the flow of product, and ‘Inventory Management’ establishes the right stock levels.
It’s very hard to get data on internal sales forecast accuracy rates. In my experience they tend to be highest, say 80% level, in mature businesses in well-established categories. For new brands and markets they may be as low as 30-40%.
Coca Cola does not claim to make 100% reliable forecasts, so the remainder is balanced by building inventory.
Source: ex-Coca Cola executive
How is the best way to estimate sales potential in the export market?
Whilst it’s not straight forward, a mixture of science and art, it is necessary! Without a forecast how can you decide how much packaging to order, how much stock to ship and what levels of stock you should have on hand before you start any promotions?
In this lesson I will show you two different approaches plus 5 practical sales planning tips used by large multinationals.