How accurate are sales forecasts?

How accurate are sales forecasts?

ONE should understand that the sales forecast is not exact but should be as accurate as one could reasonably expect for the business he/she is in and that, through measurement and correction of errors, the sales forecast accuracy is improving on a product by product basis.

It is mainly the job of planning, purchasing and production departments to be able to meet the sales forecast given this expected level of accuracy. However, it is not necessary to have an accurate forecast to plan and control your business; you do need everyone to work to an agreed forecast that is updated regularly with any significant changes.

Forecast accuracy also will depend on the historical business background you are in. If you are in a mature and stable business you should expect a reasonably accurate forecast. If the business is new and growing, the forecast will be less accurate. In either case the way to determine what your forecast accuracy should be is to start with the accuracy you have achieved in the past. This is the minimum starting point for forecast accuracy. If you do not have a formal forecasting process at the moment, you should start now.

Forecast accuracy should be measured in units of production not value unless there is no sensible unit of production (a company selling a service for instance). An important reason to measure forecast accuracy is to be better able to plan the future supply chain and value adds in factors such as selling price and even exchange rates into the forecast accuracy which do not affect the supply chain. Average selling price and exchange rate should be forecast as a separate exercise for financial planning.

Once you are measuring sales forecast accuracy, the next stage is to improve it. This is achieved by investigating any forecast errors outside the historical accuracy of the forecast.

Finally, the sales plan should be the date and quantity of shipments you expect your customer may require. If your customer requests products in line with the plan, but you are unable to ship that product, it is still a hit as far as plan accuracy is concerned. On the other hand, if your customer requests shipments on a different date from the plan it is a miss even if you could have shipped it according to the forecast plan.
Web site : www.eresourceerp.com

Middle East

UAE
eresource Middle East FZE, P.O Box: 513071, Sharjah,
United Arab Emirates.
Contact Person: Sudheer Soman Nair, CEO
Mob: 00 97155 9018499
email: sudheer.nair@eresourceinfotech.com

TMA House, 1st Floor,
Road No 16, Plot No. 6
Wagle Industrial Estate,
Thane (West) 400 604, Maharashtra
Tel: +91 22 41118000 / 8049 (50 lines)
+91 22 25828775
e-mail (Sales): sales@eresourceerp.com

Is the 'flexible' attitude of users hampering ERP success in India?

Is the 'flexible' attitude of users hampering ERP success in India?

Success of ERP performance is directly proportional to the adherence to standard operating procedures. However, we find that very common complaint against ERP is its rigid structure and disciplined standard operating procedures. Often there are ridiculous demands and expectations from users, which are conflicting with standard operating procedures. Hence ERP is either blamed or made to fail. When the user says he wants flexibility in ERP, actually he wants the official allowance to deviate from standards set for value generation. The repercussions of such flexibility are tremendous, including the loss of value.

For example, here goes a typical style of customer negotiations. The sales people of a manufacturing company arbitrarily fixed unit price and raised sales orders against customers. After physical material dispatches, suddenly the customer started negotiating with sales and the rates were changed. The sales person then wanted to pass these entries in ERP. No good system will support such incongruous requirements. Here, the user wants flexibility in addressing these issues from ERP and also expected that everything should happen automatically. To settle and account for such changes, one has to pass a number of reverse entries in ERP.

Unfortunately, some consulting companies charge extra from clients for automating such absurd provisions. The same thing happened with the above company also and they landed up with 'auto reverse entry module' supporting the existing system. More ironically, this feature of ERP soon became so popular that the company asked a similar module for purchase transactions. The ultimate chaos is always observed in finance and costing modules where multiple figures of profits, inventory values, sales income, taxes, etc. linked to the same transaction are found. Nobody could really gather any meaningful information from such sets of data over a period of time. At the end the user gets flexibility and the organization gets punishment.

There are also some cases where flexibility going to the extent of unethical business practices and in such cases illegal transactions can also be carried out.

Here is one peculiar requirement that once observed from a user. He asked for various options of selecting report sizes (A3 or A4) to use with different printers for printing the same reports. ERP was expected to be flexible enough to accommodate multiple report sizes based on printer selection. The same user never used in his earlier tenure any computerized output and did not even know how to load paper into printer.

The major flexibility expected by Indian ERP users can be summarized as "I want to do transactions any way, later on it should get corrected." Hence we find demand of provisional entries, temporary databases, notional requirements, etc. The fundamental principle of ERP is doing right things right at first time is not understood and deviations are expected to be regularized. We find many of such cases, ultimately making ERP as unused ornament lying in the bank locker.

Web site : www.eresourceerp.com

Middle East
UAE
eresource Middle East FZE, P.O Box: 513071, Sharjah,
United Arab Emirates.
Contact Person: Sudheer Soman Nair, CEO
Mob: 00 97155 9018499
email: sudheer.nair@eresourceinfotech.com


TMA House, 1st Floor,
Road No 16, Plot No. 6
Wagle Industrial Estate,
Thane (West) 400 604, Maharashtra
Tel: +91 22 41118000 / 8049 (50 lines)
+91 22 25828775
e-mail (Sales): sales@eresourceerp.com

Is the 'flexible' attitude of users hampering ERP success in India?

Is the 'flexible' attitude of users hampering ERP success in India?




Success of ERP performance is directly proportional to the adherence to standard operating procedures. However, we find that very common complaint against ERP is its rigid structure and disciplined standard operating procedures. Often there are ridiculous demands and expectations from users, which are conflicting with standard operating procedures. Hence ERP is either blamed or made to fail. When the user says he wants flexibility in ERP, actually he wants the official allowance to deviate from standards set for value generation. The repercussions of such flexibility are tremendous, including the loss of value.

For example, here goes a typical style of customer negotiations. The sales people of a manufacturing company arbitrarily fixed unit price and raised sales orders against customers. After physical material dispatches, suddenly the customer started negotiating with sales and the rates were changed. The sales person then wanted to pass these entries in ERP. No good system will support such incongruous requirements. Here, the user wants flexibility in addressing these issues from ERP and also expected that everything should happen automatically. To settle and account for such changes, one has to pass a number of reverse entries in ERP.

Unfortunately, some consulting companies charge extra from clients for automating such absurd provisions. The same thing happened with the above company also and they landed up with 'auto reverse entry module' supporting the existing system. More ironically, this feature of ERP soon became so popular that the company asked a similar module for purchase transactions. The ultimate chaos is always observed in finance and costing modules where multiple figures of profits, inventory values, sales income, taxes, etc. linked to the same transaction are found. Nobody could really gather any meaningful information from such sets of data over a period of time. At the end the user gets flexibility and the organization gets punishment.

There are also some cases where flexibility going to the extent of unethical business practices and in such cases illegal transactions can also be carried out.

Here is one peculiar requirement that once observed from a user. He asked for various options of selecting report sizes (A3 or A4) to use with different printers for printing the same reports. ERP was expected to be flexible enough to accommodate multiple report sizes based on printer selection. The same user never used in his earlier tenure any computerized output and did not even know how to load paper into printer.

The major flexibility expected by Indian ERP users can be summarized as "I want to do transactions any way, later on it should get corrected." Hence we find demand of provisional entries, temporary databases, notional requirements, etc. The fundamental principle of ERP is doing right things right at first time is not understood and deviations are expected to be regularized. We find many of such cases, ultimately making ERP as unused ornament lying in the bank locker.


http://www.eresourceerp.com

Contact Us

TMA House, 1st Floor,
Road No 16, Plot No. 6,
Wagle Industrial Estate,
Thane (West) 400 604, Maharashtra
Tel: +91 22 41118000 / 8049 (50 lines)
+91 22 25828775
e-mail (Sales): sales@eresourceerp.com


Middle East UAE
eresource Middle East FZE
P.O Box: 513071, Sharjah,
United Arab Emirates
Contact Person: Sudheer Soman Nair, CEO
Mob: 00 97155 9018499
email: sudheer.nair@eresourceinfotech.com