Why Procurement should care about sales forecasts!
“Sales forecast are always inaccurate!” is a sentence that you probably hear and utter often. While it is a fact that future demand cannot be predicted with total accuracy, it is also true that the level of forecast accuracy is still far from being optimum in most companies.
Forecast error represents an area where the improvement potential is generally very significant, typically between 30 to 60%.
The sales forecasting, or demand planning process is a crucial process for Procurement because it directly drives all subsequent supply planning activities. If a demand plan is inaccurate, no matter how perfect the supply planning process, it will inevitably generate the wrong results, as it will not be aligned with actual demand.
Ask yourself how much an improved future demand plan will help you achieve your performance targets!
David van der Walt