In order to obtain proper sales forecasting, you have to keep in mind that it takes time. Adequate/proper sales forecasting requires the utilization of expensive technology tools and is often open to errors.
While accurate and effective forecasting will aid in planning, a sales manager must consider these potential disadvantages when selecting the correct forecasting strategy. While there are many perks associated with sales forecasting, there are also an amount of drawbacks associated with it as well. When utilizing sales forecasting, a sales manager must consider these potential disadvantages when selecting the right forecasting strategy.
Main Disadvantages of Sales Forecasting
The main disadvantages of sales forecasting include the following:
- Time-Intensive Completion - While there are various methods of sales forecasting, the two broad approaches include manual and data-driven processes. In either case, significant time is required to develop forecasts. Within a traditional manual system, salespeople prepare their own forecasts by reviewing current accounts and overall projected sales. The time spent forecasting is less time spent selling. In more data-driven processes, a company often has marketing, IT and sales staff involved in building a system to collect and interpret data.
- Expensive Technology Tools - Manual processes are not as technology-oriented, but computer tools such as spreadsheets are commonly used. Typical sales organizations will also use database software to monitor ongoing relationships with customers. As you collect and analyze data in preparing forecasts, the greater its hardware and software program requirements. Companies will pay licensing fees to software providers for access. If each salesperson has account access to use in managing relationships and preparing forecasts, the bill can get hefty for an organization.
- Internal Bias - Forecasting is not always intended to be a realistic projection of anticipated sales and not a depiction of desired sales. The challenge for company marketing and sales reps in preparing forecasts is that internal bias is hard to avoid. Sales reps look better and tend to earn more commission when they achieve high sales goals. This natural desire to have lofty aspirations can lead to inflated forecasts. When sales forecasts are high, companies could invest too much in inventory and resources in preparation for selling activities.
A software that can easily aid with adequate forecasting is Advanced Planning and Scheduling (APS) software. Advanced Planning and Scheduling (APS) software enables manufacturing operations to interpret data based off of historical sales data as well as real-time data and incorporate it into the production process. Advanced Planning and Scheduling (APS) software is a must for manufacturing operations that are seeking to improve operational efficiency within their production process as well as eliminating costs.
Advanced Planning and Scheduling Software
Advanced Planning and Scheduling (APS) software has become a must for modern-day manufacturing operations due to customer demand for increased product mix and fast delivery combined with downward cost pressures. APS can be quickly integrated with a ERP/MRP software to fill gaps where these system lack planning and scheduling flexibility and accuracy. Advanced Planning and Scheduling (APS) helps planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans.
- Create optimized schedules balancing production efficiency and delivery performance
- Maximize output on bottleneck resources to increase revenue
- Synchronize supply with demand to reduce inventories
- Provide company-wide visibility to capacity
- Enable scenario data-driven decision making
Implementation of Advanced Planning and Scheduling (APS) software will take your manufacturing operations to the next level of production efficiency, taking advantage of the operational data you already have in your ERP.
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