Sales forecasting is the process of predicting the amount of product that your company expects to sell within a defined timeframe. With a well-informed sales forecast, you can better understand the volume of revenue you’ll bring in during that period. The best way to do this accurately is with sales forecasting software.
An informed idea of your future demand also enables your company to better prepare in many ways, such as by making improvements in inventory management and supply chain optimization. Companies that utilize sales forecasting tools notice remarkable reductions in operating costs and increases in efficiency.
Types of Sales Forecasting
The types of sales forecasting are typically defined by the length of time projected by the forecast. The three typical types of sales forecasting are short, medium, and long term.
Short-term sales forecast: 3 – 6 months
Medium-term sales forecast: 6 months – 2 years
Long-term sales forecast: 2 – 5 years
Sales Forecasting Software Provides Many Benefits – Here Are Five
- Sales Planning
With reliable forecasts, you can make efficient plans regarding your sales. Being able to see into your business’s future outcome helps you plan efforts — like marketing and promotions — that will help bring to fruition your forecasts.
- Production Planning
If you have effective sales planning, you’re set up to improve production planning as well. It’s financially beneficial to plan production for only the inventory you can actually sell, so as to avoid overstock and stockout situations.
Once you plan your production, you know what you need to purchase to carry out those plans. Using sales forecasting tools to inform purchasing decisions can steer you away from both under- and overspending.
- Reduced Warehouse Costs
With more intelligent purchasing, excess inventory doesn’t need to be managed, resulting in a more efficiently run warehouse. You’ll see higher turnover rates, faster throughput, more efficient shipping procedures, and other hard and soft cost savings.
- Performance Tracking and Improvement
In addition to realizing the benefits noted above, you will also benefit from improvement in your sales forecasting models as you integrate what’s learned. These improvements will build on themselves, and your forecasting will improve even more in a continuous cycle.
Every company has at least one area of its production and supply chain operations that can be improved. The first step to realizing the benefits of sales forecasting in your supply chain begins with the right software.
Contact TransImpact today to learn about how our sales forecasting software can begin providing these benefits to your company.