How a Forecasting System Can Help Struggling Companies

by Jackie Biallas

Companies may be struggling from a lack of revenue or cash flow.  They may be drowning in excess inventory and the costs associated with it.  A company may be struggling with determining the drivers of their business, instead focusing on the wrong things.  A forecasting system can help a company clarify the problems within their business and provide a roadmap to improving their operational performance.  SAFIO Solutions has helped many companies improve their KPI’s with its Sales Analysis and Forecasting Tool©.

One client of SAFIO Solutions had a severe overstock problem.  Merchandise had been allowed to build up over the course of several years.  Old styles were not liquidated before new styles were purchased.  Some of the old styles had only minimal sales for several years.  SAFIO Solutions was able to help the company clarify and categorize their data.  A new hierarchy was developed which gave the company visibility to which categories and attributes were performing well and which ones needed to be cleaned up.  It also gave the company clarity in where they were over-assorted.  The merchandise was categorized in an ABC format according to Revenue and Margin performance.  From there, the company could determine which items were candidates for liquidation.  By using the Sales Analysis and Forecasting Tool©, the planners at the company were able to forecast the sales of all the items, determine profitability and devise a plan for the items.  The company was able optimize the inventory, only carrying enough inventory to cover the sales that are forecasted to occur over the vendor lead time of the item.  The company reduced its SKU count by 50%, which led to a 64% reduction in the cost of inventory.  The company saved over $1,000,000 in their first year of use of the Sales Analysis and Forecasting Tool© due to the reduction in inventory and its carrying costs.  The reduction in inventory allowed the company to free up cash in order to invest in more profitable merchandise and other company initiatives.

Once a company’s data is loaded into the database of the Sales Analysis and Forecasting Tool©, a company is able to see all of the vital information in one place.  Planners are able to focus on KPI’s and quickly isolate problem areas or items whose information looks suspect.  By having the visibility to data organized in this manner, one of SAFIO Solutions’ clients was able to realize $20,000 in tax dollar savings due to an overstated inventory position.

SAFIO Solutions’ Sales Analysis and Forecasting Tool© also provides its customers with KPI visibility of the different accounts and channels in which the company sells.  One channel may have much higher profitability than the others, so a company may decide to prioritize selling in this channel.  Or the planner may discover that the margin for one account is much lower than it should be.  One customer found that one of its best-selling items was priced incorrectly for one of its largest accounts.  By having the data laid out in this manner, this customer was able to discover the problem quickly and remedy the issue.  Companies can efficiently strategize and make decisions to maximize profitability.

The Sales Analysis and Forecasting Tool© provides exception reporting to alert planners of priority items.  Opportunity items are those items whose forecasted sales are greater than the amount of inventory on hand and on order.  Liability items are items whose inventory levels are greater than its forecasted sales.  By knowing which items to focus on, planners can make strategic decisions quickly and efficiently.  Due to the efficiencies of the Tool, one client who was planning to add to their planning staff, discovered they did not need to, thus saving planner salary costs.

SAFIO Solutions’ Sales Analysis and Forecasting Tool© has provided its customers with insights into sales trends very quickly.  By getting early reads on an item, one customer was able to essentially buy all of the production of the item and was able to control the pricing in the marketplace until the vendor was able to produce more.  Because of the competitive advantage SAFIO Solutions’ forecasting tool provided, this item was the customer’s #1 item for the year in both Revenue and Margin.

Other areas of the company can also benefit from the use of SAFIO Solutions’ forecasting tool:

  • By developing a unit forecast by month or week, Planning assists the Distribution Center in developing a plan for its workforce needs. The distribution center can also determine where each item should be placed in the warehouse according to volume projections, increasing warehouse efficiency and providing cost savings.
  • By using the Open to Buy application within the Sales Analysis and Forecasting Tool©, planners are able to assist Upper Management and the Finance Department with projecting future sales, inventory levels, and profitability. If sales and margins deviate from this “roadmap”, a company can easily see what is working and maximize opportunities.  An Open to Buy reduces uncertainty within an organization.
  • Production can be planned with greater efficiency using the Sales Analysis and Forecasting Tool©. By using the forecasts within the application, capacity limits can be taken into consideration, production can be prioritized, batching can be planned to reduce costs and reduce waste, and workforce can be planned.  This also increases efficiency and operational performance.
  • Marketing and promotions can utilize the information in the Sales Analysis and Forecasting Tool© to maximize their efforts and spend dollars.
  • SAFIO Solutions’ Sales Analysis and Forecasting Tool© has provided its customers with insights into changing consumer demands very quickly. Customers and their Sales Teams have been able to stay ahead of the competition by increasing their knowledge of the marketplace.

SAFIO Solutions’ Sales Analysis and Forecasting Tool© has a defined process that is easy to use and understand.  The short learning curve, along with Its low-barrier-to-entry cost and 6-8 week implementation window, means that a company can start realizing savings almost immediately.  Please contact SAFIO Solutions today for a demo!