Manufacturing demand is picking up, but success depends on preparation. In this Supply Chain Byte, Lisa Anderson explains why sales forecasting must start with customers. By talking directly with customers, reviewing their forecasts, evaluating quotes, watching trends and incorporating demand plans into their SIOP (Sales Inventory Operations Planning) process, manufacturers can plan to support growth and reliably meet customer expectations.
As customer demand (sales forecasts) are starting to increase in the pipeline, tracking and developing sales forecasts is becoming even more critical. In fact, more companies struggle with growth (run out of cash, experience service issues and stockouts, etc.) than any other business trend. For example, although unpleasant, declining business is “easier” as companies cut costs, slash inventories, and lay off employees. Thus, as economic signs turn positive and investments in U.S. manufacturing soar, companies must double down on demand forecasting.
Our best clients follow a few key best practices:
- Talk with customers: Although it might sound old school, pick up the phone and talk with your customers. Keep in alignment with small changes and stay ahead of key trends and changes.
- Add insights: Take a look at customer and product forecasts, quotes, trends, and what’s occurring downstream in your pipeline. For example, are you seeing an increase in quote activity in your pipeline? Are you seeing more quotes move to funded status? Are you seeing more quotes increase in probability? Are you tracking your customers’ and customers’ customers’ forecasts and signs of changing demand patterns?
- Take a reality check: Are you ready for execution? Follow your weekly and monthly SIOP process cadence and ensure that you are taking action with changing conditions so that you are ready to ramp up or down, reallocate, invest, source additional suppliers, set up long term agreements and make adjustments with changing conditions to keep demand and supply aligned while maximizing customer value and EBITDA. To learn more about how to roll out SIOP, download our eBook, “SIOP: Creating Predictable Revenue and EBITDA Success“.
Since manufacturing has been in a recession for over three years, companies tend to move slower as they see signs of demand. If so, you will miss your opportunity. Instead, proactive companies predict, pivot, and prepare for success while mitigating downside risks.
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Creating Predictable Revenue with Demand Planning Best Practices