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Six Steps to Better Sales Forecasting and Demand Planning

Most companies are immature and uncoordinated when it comes to sales forecasting and demand planning. Follow these six steps to increase forecast accuracy, speed planning cycles, reduce inventory costs, end stockouts and increase customer satisfaction.

Six Steps to Success

Keeping the four foundational people, process, information and technology components in mind, Ventana suggests that companies seeking improved sales forecasting and demand planning consider the following six-step program:

1. Conduct an SF/DP process and system assessment. The first step is a simple but thorough, independent and unbiased evaluation of your financial and operational performance planning processes and systems. Establish benchmarks for current effectiveness and then identify areas for improvement. Be sure to include calculations for return on investment and total cost of ownership.

2. Identify user requirements and project scope. This step includes defining the business requirements and profiling the business user community. It also involves developing clear definitions of information needs and usage requirements for each person in the performance network.

3. Build a business case to improve value and results. The business case requires definitions of the value as well as specification of the cost of your proposed program.

4. Assemble the program and plan. Once you have executive sponsorship, fill out the details of the program and a plan to communicate it to the various management entities of your organization. You will need to articulate the program differently at different levels and in different areas of the organization so the value is clear to all. Address the cultural, business and technology barriers to ensure that executives will support and follow through on your SF/DP initiative.

5. Evaluate new technology using criteria drawn from the program plan. Establish specific product evaluation criteria appropriate to your organization. Vendors' product capabilities and consolidation in the scorecard and dashboard market have changed the landscape, so you should evaluate all options, from established to new suppliers.

6. Deploy the integrated SF/DP program and set of processes. Plan and work to ensure widespread operational adoption. This requires planning how to minimize disruptions to the business, culture and technology and how to address user resistance.

These steps should lead you to the goal of an organization operating with increased efficiency, effectiveness and operational alignment in the areas of sales forecasting and demand planning.

The Ventana Research report "Sales forecasting and Demand Planning: Setting the Agenda for Improving Core Processes," was written by Robert D. Kugel CFA, senior vice president of research. The report was sponsored by vendors John Galt, Steelwedge Software and True Demand, and by media partners Intelligent Enterprise, Business Manufacturing Technology and Technology Evaluation Centers. The complete report and a related Webinar can be accessed by clicking here (registration required).

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