better way to develop business forecasts
TRANSCRIPT
A BETTER WAY TO DEVELOPBUSINESS FORECASTS
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of forecast to PLAN FOR ITS FUTUREEvery business relies on some form
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But most of the times
Sometimes forecasts are accurate THEY ARE NOT
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But Consistently they are:
TIME CONSUMING
HARD TO DEVELOP
RESOURCE INTENSE
Days, weeks and sometimes months planning their long range forecasts
COMPANIES SPEND
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UNFORTUNATELY!!!No book, class or training course teaches
how to forecast properly
Managers develop their own forecasting methodologies
AS RESULT
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INCONSISTENT AND NON REPEATABLE FORECASTS ACROSS THE ORGANIZATION
LEADING TO
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They spend days trying to:
Justify underlying assumptions
Roll up all their forecasts
Rationalize the overall final number
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THIS TAKES AWAY TIME FROM Actual planning and execution to just developing
revenue numbers
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FORECASTINGDOES NOT NEED TO BETHIS DIFFICULT
NOT ANYMORE!!
With a logically structured forecasting methodology and smart quantitative tools, companies can develop more
ACCURATE, REPEATABLE and RELIABLEforecasts in minutes
?SHOULD FORECASTS BE DEVELOPED?
SO HOW!!
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Finance and Management
Factory operations
Product Management
Sales
BUSINESS FORECAST
First, get the right parties at the table
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3
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Finance and Management
Factory operations
Product Management
Sales
BUSINESS FORECAST
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Then get top management’s financial targets and expected market conditions
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DATA BASED BASELINE REVENUE FORECAST
$300
$250
$200
$150
$100
$50
$02011 2012 2013 2014 2015 2016 2017 2018 2019 2020
82,0%
81,0%
80,0%
79,0%
78,0%
77,0%
76,0%
Actuals Forecast
Use these estimates and data on historical performance to develop a baseline forecast
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Finance + Management
Factory operations
Product Management
Sales
BUSINESS FORECAST
Then utilize sales feedback to account for potential new, existing or lost business
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UTILIZE A SIMPLE SALES PIPELINE TOOL TO CAPTURE SALES INPUTS
Part Number Customer Industry IndustryPeak Expected Annual Volume
Expected Price ($per unit) Probability Status Expected Start
Project Lifetime
AZ349C-52 Precision Microelectronics Technology / Semiconductors AlphaDigi Life Extension 1,900,00 1,42 High Proposal Jan 2016 3
AZ349C-52 Argo Chemical Industrial Chemicals Argo Fertilizer Plant 234,00 1,42 Medium Proposal Jan 2016 3
AZ349C-52 Otis Appliances Industrial Argo Fertilizer Plant 2 1,234,00 1,72 Medium Samples Jan 2016 3
AZ349C-52 DynaRob Military / Robotics Extended Battlefield Robot - 13,100,00 0,92 High Proposal Jan 2016 3
AZ349C-52 Precision Microelectronics Technology / Semiconductors AlphaDigi Life Extension 19,00,00 1,42 High Proposal Jan 2016 3
AZ349C-52 Precision Microelectronics Technology / Semiconductors AlphaDigi Life Extension 19,00,00 1,42 High Proposal Jan 2016 3
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Calculate total expected revenue of all opportunities in the pipeline and expected time frame
Total value of revenue from expected new
opportunities
Expected total revenue
• Probability of success • Time into future • Sales success rate • Typical product ramp up rate
WEIGHTED FACTORS
REVENUE CALCULATION
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Finance + Management
Factory operations
Product Management
Sales
BUSINESS FORECAST
Then include product management inputs about new, upcoming or soon to be obsoleted products
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Product Extension
DeclineMaturityGrowthIntroduction
Sale
s Calculate potential revenue from upcoming new products and planned obsolete products based on historical ramp up and down curves
REVENUE PER PRODUCT LIFECYCLE STAGE
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Finance + Management
Factory operations
Product Management
Sales
BUSINESS FORECAST
Finally, include factory inputs to ensure manufacturing capacity is capable of supporting the expected total revenue
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Adjust total revenue based on factory’s feedback on available capacity to support upcoming demand
CAPACITY ANALYSIS
IS EASIER SAID THEN DONEGood comprehensive approach
MULTIPLE EXCEL FILESCollaboration with
is not the best way
MANAGERS NEED A RELIABLE COLLABORATIVE PLATFORM to easily and quickly gather inputs from all parties and quantitatively analyze data to
develop an overall forecast
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Finance + Management
Factory Product Management
Sales
KEY STAKEHOLDER INPUTS
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SMART DATA ANALYSIS
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EASY INTUITIVE MANAGEMENT DASHBOARD
A single dashboard to develop business forecasts in minutes
SMART DATA ANALYSIS ENGINE
SALES PIPELINE MANAGER
PRODUCT LIFECYCLE MANAGER
FACTORY THROUGHPUT MANAGER
A COMPLETE BUSINESS FORECASTING PLATFORM
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NO MORE CONFUSION WITH MULTIPLE SPREADSHEETS
AN EASY WAY FOR ALL KEY STAKEHOLDERS TO COLLABORATE
SINGLE SOURCE OF TRUSTWORTHY DATA
SMART DATA ANALYSIS FOR FACT BASED FORECASTING
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