«Forecasts»
What is the main function of Forecasts in the Company?
The forecast is a tool whose main function is to reduce risks in decision-making regarding different aspects of a company such as: uses, purchases, supply, commercial conditions, technology, and others.
This is very important in any company, since accurate forecasts can translate into more resources for it.
Certainly forecasts can be used by anyone who needs them, but it is not easy to define what the future needs will be for each company, so it is necessary to do an excellent research job.
According to the type of company we are talking about, the task of carrying out the different forecasting requirements will be assigned to the corresponding area, such as: marketing, materials department, or others. I have to mention that a single company may require several forecasts from different areas, it all depends on the individual case.
"Sales forecast"
The sales forecast is used in the vast majority of profit-making organizations and is commonly made by the marketing area, it is also one of the forecasts that have the most weight and importance for the entire company.
The importance of the sales forecast resides in that it is taken as an elementary basis for developing other derived forecasts, such as the purchase forecast.
Sales Forecast VS. Sales Planning. They are the same?
Sales planning and forecasting are terms that are often confused, related to each other, but I would say that they have clearly defined purposes.
A forecast is not a plan, but rather a quantified statement and / or appreciation of the future conditions surrounding a particular situation or matter, based on one or more explicit assumptions. A forecast must always state the assumptions on which it is based. A forecast should be viewed only as one of the inputs in developing a sales plan. The management of a company may perhaps accept, modify or reject the forecast. Instead, a sales plan incorporates management decisions, which are based on forecasting, and other aspects such as sales volume, prices, sales efforts, production, and financing.
The Problem of Forecasting
The problem with forecasts lies in their lack of reliability, but this is a factor that is constantly present, so the main challenge for those who do it is to determine the degree of accuracy. A widely wrong forecast is capable of causing major conflicts within a company, not caused directly by the forecast, but by actions that have been taken based on wrong information.
For this reason, it is important to take into account all the necessary factors to formulate the forecast, since anyone can alter its results, and without forgetting the temporality factor, for which it is necessary to regularly update the forecasts, to have greater certainty.
