for CPG Brands
TOOLS AND DATA IN FORECASTING
Transitioning from Basic to Advanced Tools
So we’ve discussed the various options out there when it comes to forecasting tools and data sources.
But at what point in your brand’s journey do those tools go from optional to essential?
Let’s walk through how you can implement different forecasting strategies across different scales of operation.
Basic Forecasting for Smaller Brands
Smaller brands, often operating with limited resources, require accessible, straightforward tools for forecasting. Here's an overview of basic tools and a simple walkthrough:
Tools Overview:
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Excel: A ubiquitous tool offering powerful functionalities like pivot tables, formulas, and graphs to analyze historical data and project future trends.
Google Sheets: Similar to Excel but with the added benefit of cloud storage and real-time collaboration.
Basic Forecasting Walkthrough:
Collect Historical Data
Gather sales data, inventory levels, and any promotional activities from the past year.
Identify Trends
Use Excel's graphing capabilities to visualize sales trends over time. Look for patterns related to seasonality, promotions, or other external factors.
Simple Moving Average (SMA)
For a basic forecast, calculate the moving average of your sales. For instance, a 3-month SMA at any point would be the average of sales from the previous three months.
Set Up Your Forecast
In Excel, input your historical data in one column. Use the =AVERAGE() function to start creating your SMA forecast in the next column.
Adjust for Seasonality
If you notice seasonal trends, adjust your forecast by applying higher weights to periods with traditionally higher sales.
Advanced Forecasting for Bigger Brands
As brands grow, the complexity of their operations often requires more sophisticated forecasting tools and methodologies. Here's an overview and guide for advanced forecasting:
Tools Overview:
Dedicated Forecasting Software: Solutions like SAP Integrated Business Planning, Oracle Demand Management, or IBM Planning Analytics offer powerful, AI-driven forecasting capabilities.
Custom-built Models: Leveraging platforms like R or Python, brands can develop models tailored to their unique needs, incorporating machine learning for enhanced accuracy.
Advanced Forecasting Walkthrough:
Data Integration
Aggregate data from various sources, including ERP systems, CRM platforms, and external market research, into a centralized data repository.
Machine Learning Models
Utilize historical data to train machine learning models. Techniques like time series forecasting (ARIMA, Exponential Smoothing) or regression analysis can predict complex patterns.
Incorporate External Data
Integrate external factors such as economic indicators, market trends, and consumer behavior analyses to refine your forecasts.
Scenario Planning
Use your forecasting software to run various scenarios based on different assumptions. This can include optimistic, pessimistic, and most likely scenarios to cover a range of possibilities.
Continuous Refinement
Advanced tools often provide real-time analytics, allowing brands to continuously refine their forecasts based on the latest data.
For larger brands, this level of forecasting supports strategic decision-making across all facets of the business, from supply chain management to financial planning and marketing strategies.
Secret Option C:
CPG brands often find themselves at a point on the growth curve where they’re in the awkward middle phase — too big for basic forecasting tools but maybe not quite ready for advanced, enterprise level tools either.
If that’s you, don’t worry! You’re not alone. There are a number of trade promotion forecasting tools out there that can be tailored to give you exactly what you need, when you need it.
Tools like Vividly, for example, offer brands customized packages with add-ons like robust forecasting, end-to-end deduction management services, and more!
Forecasting is an indispensable process that spans the spectrum of business operations, from the smallest startups to global conglomerates. By starting with basic tools and methodologies, smaller brands can lay a solid foundation for growth.
As your brand evolves, adopting more advanced forecasting techniques becomes crucial to navigating the complexities of global markets. Whether through simple Excel models or sophisticated AI-driven software, effective forecasting empowers brands to anticipate the future and strategically position themselves for success.
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NEXT UP
Steps to Increase Forecasting Sophistication
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Own Your Future With Intelligent Forecasting.
Forecasting in Excel is tedious, time-consuming, and error-prone.
Take the guesswork out of forecasting. Vividly automates the entire sales forecasting process and updates any changes in real-time.
See how industry leaders like Liquid Death and Perfect Snacks benefit from Vividly’s intelligent forecasting.
