Singing Off the Same Page: The Importance of and Integrated, Shared Forecast

Jon Roskill | May 22, 2014

The first key to customer satisfaction is having the right product available in the right quantities at the right time to fill customer demand. While that sounds easy enough, it requires not only the ability to satisfy present demand, but also to predict future demand. For most businesses, the ability to accurately forecast future needs is an essential part of their success.

Many people tend to think of forecasts in terms of sales; a monthly prediction of what purchasers will buy is a key strategizing tool. But the fact is that the sale of the product is the last in a long line of transactions: acquiring the appropriate amount of raw materials, manufacturing the product, and then distributing the product where and when it is needed. Each of these transactions depends on an accurate sales forecast. If the sales forecast is inaccurate or if it changes mid-month, your business could end up with a shortage or surplus of raw materials or products — as well as some unhappy customers.

Singing Off the Same Page: The Importance of and Integrated, Shared Forecast

One big problem that many businesses encounter is that different parts of the company are working with different forecasts. Sales, manufacturing, purchasing, and other departments might each have their own forecasts, which may or may not integrate well with other departments’. Each department is making its day-to-day decisions based on these forecasts. Different forecasts increase the chances that you’ll have an imbalance of raw materials, products, and customer demand.

So where does your enterprise resource planning (ERP) solution come into play? Because ERP systems integrate data from so many parts of the company, they are uniquely positioned to help you make accurate sales forecasts. By pulling together information from different departments and historical records, the ERP solution can help you create an integrated forecast that allows everyone in your company to “sing off the same page,” creating harmony rather than discord.

Good business management software does more than simply help you create an accurate forecast; it can help you implement steps necessary to act on the forecast. If a forecast is made in terms of dollars in sales, the ERP program can convert that into units of product and then into the amount of raw material needed to create the product. For instance, if you plan to sell $2,000 worth of widgets in May, the management software can translate that into 1,000 widget units and 50 pounds of steel needed to create the widgets. It can generate these forecasts for your manufacturing, distribution, and purchasing departments automatically, and it can create and send out purchase orders to your suppliers for the amount of raw materials you will need.

What if plans change halfway through the month? For instance, widget sales are slow, but gadget sales are hot. You don’t need steel, but now you need plastic. The ERP system can make automatic adjustments on the fly. It can reconfigure the forecast and cascade down all of the resulting changes. It will automatically cancel the POs for the materials you don’t need and create new ones for the materials you do need. It will also help your company automatically prepare for distributing gadgets to stores rather than the widgets you had been planning on—all without the need for any manual transaction intervention by your employees.

Today most businesses are struggling in industries that are very competitive. Every company is looking for something that can give them an edge in customer satisfaction compared to their competition. Accurate forecasting—integrated with transaction execution—is only one of many benefits that good business management software can bring to your company, but it is quite an edge in today’s market.

Find out how you can create harmony in your business with Acumatica.

Jon Roskill

Chief Executive Officer at Acumatica. Passionate about sports, family, community and Cloud ERP with & thru the channel!

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