The Ins and Outs of Sales Forecasting Software
If you have had the opportunity to work with any mid-largesize company, chances are that at some point you have had to think about howsupply chain and logistics affects your profession. From the goals of a salesdepartment to the gauged demand of a marketing department; from the trackedsupply of an operations department to the measured profit of a financedepartment, nearly everyone is affected by logistics. For this reason, basicplanning and forecasting processes using non-industry specific spreadsheetsoftware likely will not cut it.
The cohesive solution to these logistical coordinationissues is revenue forecasting software. In simple terms, sales forecastingsoftware allows you to view a “forecast” of your upcoming sales. This forecastprovides information such as how many sales will take place and which SKUs andlocations are responsible for those sales. From that information you can thengather what your best-selling products are, what your best locations are, whatyour slow-moving products are, etc. That information can be broken down evenfurther to determine which products may be taking up valuable inventory spaceand which product should have more stock.
Because of the wide impact supply chain has on everydepartment within a business, improving operations directly with salesprojection software will have an impact on every department as well. By gettingthe quickest moving items to each of the locations that they sell the best in,a company can avoid not having enough supply to meet the demand. Adversely,slow-moving items, especially the ones that expire in some way, can always havearound the exact amount needed. This can potentially save the company asignificant amount of resources in avoiding both stock-outs and overstocks.
The question then arises, how does sales forecasting work?Most solutions use historical history trends to project an outcome. Forexample, let’s say that you own an ice cream business. One metric included inthe forecasting algorithm is seasonality. It’s likely that your ice cream saleswill be higher in the summer than any other season because it’s hot outside andpeople want ice cream as a treat to cool down. Your forecast would take thatinto account, as well as how well each flavor performs during which periods ofthe year. The history is then run through algorithms and the most closelypredicted accurate one is chosen to represent the forecast.
There is even small business sales forecasting software thatcan use just a couple of years of sales history and can help you launch andforecast new products by comparing them to similar existing products. Inconclusion, sales forecasting is a deep and complex world with a lot to besaid, be sure not to underestimate its importance and how it can impact yoursavings and profit margins.