The Importance of an Accurate Sales Forecast
By: Russell Gummelt
Traditional sales forecasting strategies rely on a variety of platforms to establish a vision for where your business might be headed.
The key word is “might”; most sales forecasts rarely provide you with comprehensive oversight of the entirety of your business. The act of consolidating spreadsheets from various departments created on differing software makes uncovering a single source of truth harder than it should be. Some departments may be pulling reports from Cognos, while others use Tableau – finding a universal language amongst different datasets can require time-consuming levels of nuance and cumbersome attention to detail.
Sales forecasting vulnerabilities
Both manual and data-driven processes are time and labor-intensive – with more time spent forecasting leaving less time to sell. Depending on the complexity of your operational infrastructure, your marketing, IT and sales departments are all involved in building a system to catalog and discern your critical sales forecasting data. The juggling of spreadsheets and lack of cross-department communication also hinders the clarity and stability of your sales and statistical forecasts.
The inability of your management and thought leadership to view the forecasts until all of the spreadsheets and datasets have coalesced further exposes the vulnerabilities facing sales forecasting methods.
More often than not, your monthly sales forecast is submitted at the last possible moment before the start of the period in question – leaving no time for early insight into this critical business process.
The global COVID-19 pandemic has placed a renewed focus on the importance of accurate sales forecasts. Materials are harder to source for manufacturers; glass and aluminum are increasingly rare commodities in the bottling industry, for example.
These days, sales forecasting demands a single source of truth to accurately provide insight into the precise needs of your business and its customers.
Fortunately, Anaplan offers scalable solutions designed to streamline the sales forecasting process.
The Anaplan advantage
Allitix and the Anaplan solution support detailed hyperscale models that allow your business to bring this ‘single source of truth’ into focus. By incorporating edge-to-edge visibility, your sales forecasting plan is able to scale with unprecedented levels of granularity.
The benefits of improved insight
With Anaplan, managers can view reports daily if needed. This ability affords unprecedented insight into the trends developing in their sales forecasting process throughout the week, or at whatever interval they choose. This improved visibility affords your management and thought leaders the ability to pivot their sales strategy based on real-time insight into the data being aggregated and coalesced for their sales forecasts.
Rather than waiting for your various departments to input their forecasts via an array of differing software platforms, the shared architecture of Anaplan provides a clear line of sight into the progression of your data collection efforts. Additionally, the ability to add multiple due dates for your various departmental inputs allows you to continually track Forecast progress.
By consolidating your sales forecasting strategy onto a single software application, the entirety of your authorized workforce can view the data being contributed to your sales forecasts. By deploying this single source of truth, cross-department clarity is increased, and your sales leaders and consensus planners will have better visibility and insight on a daily basis.
Access to nightly reports can provide a snapshot of your ongoing progress, and inform your planners of the important tasks for the next business day.
With Anaplan, the clarity of sales forecasting can be extended across retailers and channels as well.
The power of a consolidated platform
Imagine your business sells a product across multiple drug chains across the United States. You have one department tracking sales across a major retailer, such as Walgreens, while another handles CVS. Each department may have a clear understanding of the forecasts pertaining to their retail locations, but very little understanding of how their products perform in other stores.
Anaplan offers the ability to group these separate forecasts into one logical sales channel to show the strengths of the product across similar businesses that carry it on their shelves. This visibility provides clarity to understand how the drug channels are trending overall. Insights from the department handling CVS may be able to benefit the Walgreens business, affording an unprecedented opportunity to scale with increased dexterity, based on this shared data.
The ability to group retailers into categories will offer additional insight into how each channel is trending overall, providing a high-level view one step removed from a single-retailer focus.
Scalable forecast solutions
Anaplan supports multiple model functionality on a single platform, allowing your connected planning strategy to accommodate unprecedented levels of complexity. By unifying data collection and analysis on one source, you’ll be able to transform detailed inputs into actionable recommendations, thanks to Anaplan’s embedded optimization, predictive algorithms and AI capabilities.
Anaplan’s multiple model support will create accurate sales forecasts for even the most complex business scenarios, while staying ahead of change thanks to the multi-dimensional capabilities of the platform. Simply put, Anaplan is built to last, and durable enough to handle unlimited constraints while providing 100% consistency across all model changes.
The connected planning benefits extend to comprehensively cover:
New product innovation. With Anaplan, you’ll be able to build a profile based on product attributes in order to make the right plan for sales success.
Statistical forecast. Any product with over two years of history is a great candidate for the stat forecast modeling capabilities of the Anaplan platform.
Machine learning (PlanIQ). Leveraging the AI and processing power of Anaplan affords the creation of more advanced models that incorporate the history of a product and produce an accurate determination based on relevant historical data and future trend forecasting.
The power of connected planning
One of the most important aspects of an accurate sales forecast is the granularity with which your business can view relevant data. Whether you’re looking for detail into the performance of a region/state, retailer or product, Anaplan can scale to find the answers you’re looking for.
From there, you’ll be able to allocate the data you need further down the supply chain, from sales centers to lower-level products – with Anaplan, your modeling and reporting insights are unlimited.
Here’s an example of how Anaplan uses predicted customer inventory (sell-in minus sell-out) to calculate a minimum week of sales quantity. Let’s take a look at how this insight can be an important factor in business forecasting:
Imagine zeroing in on a minimum week of sales to recommend when a retailer should place an order to have it delivered before in-store stock is completely exhausted. Anaplan targets the predicted sell out date (typically based on POS data) versus what the company sold , and determines how long the remaining sell-in inventory will take to move.
Let’s say our retailer received 1,000 units of a beverage flavor and has sold 300 of those units. Anaplan can determine that the retailer will require an additional shipment in exactly five weeks.
Partners in progressive sales forecasting
Anaplan can scale to provide a bespoke solution for your sales forecasting strategy. Suitable for both smaller businesses and larger operations, Allitix can adapt an Anaplan solution in order to offer a partner – not just a platform.
By choosing an Anaplan solution, you’ll simultaneously increase the productivity of your workforce, while leaving the heavy lifting to your Alltix teammates.
For example, hard-coded errors inadvertently created by your workforce in Excel can easily extrapolate, snowballing into errors that can take months to catch. The error-proof, easy-to-use functionality of Anaplan prevents these hard coding errors from occurring, offering a level of comfort and relief for your dedicated team.
The different product profiles available for your sales forecasting needs include:
Simple. This deployment offers one planning method (statistical), and a way to do NPI forecasts and manual manipulation.
Advanced. This path affords multiple planning methods and strategies around when to use these, complete with process documentation.
Regardless of the deployment necessary to achieve the task at hand, Anaplan partners with you for the whole process, integrating with your IT departments and resources, continuing to provide guidance and offer feedback throughout the sales forecasting journey.
Why Anaplan is the flexible, adaptable solution for your sales forecasting needs
The ability to review the forecast daily and deploy actionable strategies based on insight into the direction of your sales models can provide your business with a competitive advantage.
Anaplan uses Forecast Value Add, MAPE, and Weighted Forecast to measure data actuals against your predictive analytics.
If the need arises, you’ll possess the ability to compare and contrast the attributes of an Anaplan generated forecast vs what forecasters override, to show how the human element is impacting the final forecast.
Thanks to the power of Anaplan, some businesses gain entirely new insights into their modeling that they weren’t aware of!
Allitix and Anaplan are always willing to integrate with your FP&A and IT resources to transform how they view forecasts. While some companies have previously operated with a 20% forecast accuracy, employing a tailored Anaplan solution typically results in 60% – or greater – insight into the data that ultimately drives your critical business decisions.
Contact Allitix today, and request a free demo to learn more about how Anaplan can take your connected planning strategy to unprecedented heights. Together, we’ll harness the power of a unified platform, and transform your predictive modeling capabilities to ensure greater success.