REFORECAST OFTEN, BUILD ALTERNATE SCENARIOS
First of all, sales planning often begins in one of two fundamental ways:
Top-Down Planning: FASTER, LESS PRECISE. Start with overall financial targets at the company or store level and then spread it down across locations or product categories, often based on historical penetration.
Bottom-Up Planning: SLOWER, MORE THOUGHTFUL. This is where we build forecasts from more granular levels like item, style, or category, aggregating expectations from the ground up to inform higher-level plans.
Both methods typically rely heavily on historical sales data as a starting point, or “seeding” the plan. But let’s be honest, in today’s volatile times, simply repeating last year’s numbers just isn’t enough. We absolutely must layer in insights from:
Recent Sales Trends: We need to analyze short-term performance to gauge current momentum.
Seasonality: Factoring in expected peaks and troughs based on product type or time of year.
Market Intelligence: This means incorporating knowledge of competitor activity, promotions, and broader industry shifts.
Expert Judgment: Leveraging YOUR collective experience as buyers and planners who have deep product and customer knowledge. The magic is inside your head and your team.
Luckily, better tools can help weather the storm, and they already exist:
Integrated Forecasting Engines use multiple years of historical data to generate projections using proven algorithms, as well as AI and machine learning. These tools are game-changers, helping you identify likely patterns and trends more quickly and accurately than manual methods ever could.
In our case, more than half of the new clients that we have brought on – rely on long-range store and category sales forecasting to help smooth out bad history and speed up the planning work.
Multi-level Planning: create and compare plans across different levels of detail (company, division, category, store, channel). Top-down, bottom-up, and middle-out work enables reconciliation and locking in specific numbers while changes flow elsewhere.
Multiple Plan Versions: It’s vital to maintain original budgets, revised plans, and forecasts to track performance against various scenarios. This helps you understand tariff impact “what ifs.”
KPIs and Metrics: Use forward looking key performance indicators (KPIs) like weeks of supply, turn, sell-through, and stock level forecasts. That way a Sales Reforecast can immediately highlight true receipt needs.