The Sales Forecast as Fiction.
Most sales forecasts are a work of ambition. No salesperson is going to forecast that they are going to miss their target. They are not going to forecast that they will fail. That alone means that the forecast is going to contain items which simply should not be there. We can discover which those items are. We work closely with our partners SymVolli ltd. Have a look at www.SymVolli.com
We offer an initial consultation, free of charge with your own company figures.
We, therefore, work to ensure that in an optimised sales and marketing environment, that your sales team are fed with the right leads, and are managed to sell the product mix which most benefits the company's profits.
On the other hand, we make the ongoing sales forecast reliable, credible and capable of rational analysis over the months it covers. We can spot a forecasted order which is lacking credibility very quickly and move to correct it.
Under an optimised sales and marketing strategy, hitting target becomes demonstrably a little easier. This takes time, but it is nearly always achievable. We also make the marketing side of the sales forecast rigorous - to your own rules. We have achieved 95% accuracy in this by applying our simple rules coupled to your rules.
Actions we take:
- When we perform an optimisation, the desired sales plan line-up of products will change. Change cannot come about in a day. If you don't believe us, look at the introduction of new timetables into the entire UK rail network on one day.
That was a cock-up which the diligent use of Operational Research, Linear Programming and Optimisation would both have predicted and prevented if enough of us OR guys had been in place in the rail companies and in the DfT.
So, we usually cannot change your company overnight, but we can change it to optimal profits over, say six months to a year. This makes getting the sales forecast right and credible all the more important.
- Then we can take your existing forecasting technique and refine it into something which is accurate and deliverable. We work with our ERP partners SymVolli to achieve this.
The forecast as an optimistic branch of fantasy writing will become history. SymVolli will not only produce the sales forecast for you, but it also stores all the figures needed for optimisation. Your forecast then becomes part of your company model and is therefore under your direct control.
- The big order problem and the forecast: If a salesperson forecasts a particularly large order, say one 100 times greater than you usually manufacture, because the forecast is now credible, as the due date arrives, you can take measures to ensure that it is both deliverable and does not wipe out the rest of your production. Our model will tell you exactly what the effects of a Big order will be. Big orders can sometimes kill companies. We allow you to model the impact of a large order and you can see what the knock on effects are on the rest of your range. This allows you over the forecast period to take appropriate steps.
- By optimising the marketing effort and sales effort as a partnership, we can use marketing to drive sales towards both their sales targets and towards the most profitable mix of products to sell. Because the return on marketing investment becomes provable, marketing will rarely have to ask for a budget increase again.
The new sales plan will be the optimised sales plan for maximum profits. It might contain some surprises, but it is up to the directors to decide whether dropping an unproductive product from the range is desirable. Or scaling up a very productive product by a factor of 10. In one example, we saw the MD slash the price of a high margin product, an infrared thermometer, by 55%, because he knew that sales would go up by over 1000%. Our model showed that this was also the most profitable solution. In fact, the model wanted the company to increase sales by a factor of 50. So he went for that and achieved it.
Words of caution: An optimisation can be ruthless. If a product or service which you sell consumes resources needed by other potentially more profitable lines which consume fewer non-costed resources (Benchspace, warhousing, test rig time etc) it will reduce it to zero. It will get rid of a product line. Now that is something which should only be done by the directors. There may be reasons for retaining such a product. You can include it at last year's sales levels and leave it out of target considerations. You can let it wither. Or you can drop it.
What happens if I drop a product? It is a feature of the model which has been enjoyed by directors since 1974: "What would happen if I dropped or disregarded product X". Well, now that we have the model, let's find out.
And no, you cannot do this through cost accounting or from management accounting.
These are the reasons why we provide you with Nobel prize-winning maths, made accessible through a user- friendly interface allied to our professional assistance, helping you to use it, for as long as you need our support.
