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Readers Respond: Sales Forecasting Challenges

Readers Respond: Sales Forecasting Challenges

February 2, 2011

I don't have a crystal ball, and if you're like anyone I've talked to in the past year or two, you don't either. Yet, we all want to know what's happening next and how we can plan for that uncertain future.

Perhaps that's why a recent conversation on sales forecasting has sparked so much interest. The conversation, which can be found on MDM's LinkedIn group (Modern Distribution Management's Independent Distributor Network), has focused on the effectiveness of sales forecasting and what tools can be used to improve the process.

The conversation started with a question: What are your thoughts on sales forecasting? For some, it has been a process of trial and error. As one group member noted: "I've been forecasting sales for many years with varying degrees of success."

Others note that too many people are relying on the wrong information or the wrong technology to accomplish the task. "I see too often the use of CRM, 'Pipeline' and statistical data to determine a forecast. Really? If it were your business and you had to report to your financial institution, wouldn't you want real data?" wrote one member.

In the past, forecasting has been an effective way to avoid shortages or delays in business, but in recent months the process has become more challenging. I recently spoke with Jon Schreibfeder, president of Effective Inventory Management, about the topic (read Channel Choke: Demand spikes create product shortages). In that article – as well as in the LinkedIn conversation – Schreibfeder offers some advice for making sure your forecasts are effective. He writes:

"Keep in mind that a good sales forecast can be comprised of up to five different elements: a consideration of past usage, an observed increasing or decreasing pattern of sales, external factors (e.g., the economy or weather) that can affect demand, collaborative information from salespeople and customers, and ensuring that the proper timeframe is considered (e.g., if you are faced with a 90 day lead time you have to be looking at a forecast of what you will sell 90 days from today)."

What are your thoughts on sales forecasting? Join the conversation on Modern Distribution Management's Independent Distributor Network.

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