Business GrowthCRM Best Practices

Forecasting in Manufacturing: Supply Chain Management vs Sales Accuracy

Accurate forecasting in manufacturing is critical, and can sometimes be tricky. The information from a sales forecast uses all aspects of a manufacturer’s business. This important data includes manufacturing schedules, inventory management, product positioning/placement, and production planning. Planning budgets, investments for capital equipment, and raw material purchases are also good examples of areas where forecast information is critical.

Balancing Supply Chain Management with Sales

The supply chain must have the correct amount of raw materials to manufacture the final products. Once these projections are understood, the product is marketed and distributed. These processes are all based on the forecasting from the sales teams.

Problems arise when your forecast is off. You might end up burdened with units to carry or too much inventory – an expensive issue. You may also be stuck with the raw materials procured to create a product you no longer need. Or, if your inaccurate forecast caused you to produce too few units, you might face back-order nightmares or canceled sales. You could even have customers drop you as a vendor.

These scenarios create complications within your organization, supply chain, and your customers. The solution has a timelier and more accurate forecast. Sale teams will hit their revenue targets and the factory will build the correct product mix. This lowers inventory levels, reduces the backlog and improves lead times of finished goods.

 

Using Sales Forecasts to Succeed

But how do manufacturers manage the delicate balance of projecting estimated inventory, without over- or under-producing stock? There are a few low-tech key ways this can be achieved whether or not your company has a CRM strategy:

Communication across teams. If everyone knows how much stock is on hand and how much is needed, this will ensure enough product is ready for order fulfillment. Which prevents excessive production or falling into back-order. That means sales and manufacturing teams need to communicate often and effectively.

Planning Forecasting. Sales teams need training on the requirements and expectations for each forecast.

Multiple Forecasting. It is helpful to make a forecast for various time frames and to double-check the results together. This will also reveal when you might need to adjust a larger forecast and will help catch an error faster.

Use Sales and Manufacturing Forecasts in Tandem. You can’t have the right inventory without knowing how many you expect to sell and thus how much more you need. When either forecast needs adjusting, teams should make changes in both reports.

CRM and Forecasting

By now, you should be getting the message that forecast accuracy is key and CRM systems can help with this. Having a forecast module in a CRM system is a must for manufacturers.

Previous to CRM, sales forecasts were an educated guess. Shockingly, even today some still are. A sales manager may look at a customer’s purchase history and create a budget that estimates potential future sales numbers. Someone might also mandate a random X% increase in revenue without having any data to back up the jump.

These methods put manufacturers at risk because their guesswork creates severely inaccurate forecasts. CRM solutions have the power to change the game and make balanced forecasts based on data and facts, not guesswork.

How is this possible? Simply put, CRMs allow sales reps to analyze customer details (including ‘buying behavior’) in real-time reports. They can expand in mere clicks to reveal the bigger picture or view how the product is moving on a macro-level. These insights provide real-time data that calculates more accurate and reliable sales forecasts. Click here to read about forecasting in manufacturing case studies.

Using Sales Data That Makes Sense

The information generated by a CRM system gives a more accurate perspective of true demand. Statistical projections based on analytics like “average closing ratios” and “average close rate by sales stage” tend to be more accurate than methods based solely on an educated guess. They also allow a much more precise calculation of risk-versus-reward for each sale.

Marketing and sales departments prefer to plan forecasts in dollars (revenue). But,  forecasting in production management tend to forecast in units. Ultimately, for products to be available when the customer needs them, you need to develop a forecast by product in units. Your sales forecasting system should be flexible enough to aggregate demand on many levels of detail (in units and in dollars). This will meet all company-wide needs. CRMs allow you to manipulate the data, and quickly match the unit or need your team requires.

Forecasting in CRMs are Changing the Game

CRMs are making forecasting more transparent, immediate, and accurate across the board. The information is now at everyone’s fingertips at various levels of management in real time. Gone are the days when sales managers would manually create a forecast that was out of date by the time it hit the salesperson’s desk.

CRMs Forecasting Benefits:

  • Increase accuracy by linking the opportunity pipeline to the forecast
  • Sales reps have access to real-time data on custom dashboards with drill-down features
  • Statistical reports are generated to determine up-sell opportunities
  • Analyze historical sales data to reveal opportunities for improvement
  • Identify & focus on quality leads and close deals faster
  • View production capacity, allowing for more accurate quotes
  • Sales and Demand Teams collaborate in real-time on forecasts
  • Customers and sales partners can view and create forecasts via a self-service portal
  • Senior management can analyze actual results compare to the sales forecast
  • The forecast is measured and reviewed frequently, which in turn, fosters overall accuracy in projections

Conclusion

At the end of the day, whether your business is big or small, CRM can help you avoid over- or under-delivery on unit sales fulfillment. If you’re ready to integrate a CRM into your unique business processes, Clear C2 has robust solutions to handle everything from client relationships to marketing automation and more. We’re prepared to help you nail your next sales forecast and streamline all aspects of your business. Contact us or register for a free 30-day trial today.

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