GREATER PRECISION WITH STATISTICAL FORECASTING

The task

Greater accuracy – a watchword in new solution

A large international production company had a desire to improve the quality of forecasts of the sales volume. In short: reduce the difference between the forecast and the actual volume sold.

A more precise forecast would help the company to organise and utilise the production capacity optimally and to ensure to a greater degree that the order book matched the production capacity.

The company had an extensive historical data foundation in relation to the sales volume; consisting of, among other things, historical production data and order history. But because of the complexity and volume of the data foundation, the company had difficulty converting raw data into useful information.

“We had a desire to become better at looking out into the future. We are a company with many data points, and we would like to be able to piece data together in the right way to increase the precision of our sales forecast”, says the project manager at the company. “And because we work in an industry in which new orders often are submitted on short notice, and in which our customers ask for great flexibility in relation to delivery, it means that we must be especially good at predicting when our customers are expected to place orders”, adds the company’s sales director.

exacto was hired to develop a more accurate, automated and data-driven forecasting solution. There was a need to move away from heavy Excel sheets and over to a quicker solution, based on Excel and SQL – exacto’s specialty.

The solution

Statistical data set the direction

In close cooperation with the company, exacto made an extensive analysis of the company’s sales volume – both by looking back at several years of realised data and by including data from future orders and submitted offers. The analysis was important to fully understanding which parameters should be taken into account in the calculation profile for a given customer’s orders for the company’s products. The goal was a tailored solution which, with a starting point in the statistical data, could prepare a more accurate sales forecast faster, and in which the process was carefully adapted to the company’s business.

“We wanted to become more accurate concerning our expected sales results and thus better at carrying through on orders in the future. With the new solution, we have gotten a nuanced and consolidated overview of sales of materials in relation to the production capacity. We have become better with detailed planning and ongoing handling of orders”, says the project manager at the company.

The solution itself is based on an underlying SQL database and an Excel-based user interface. The company can maintain the application itself via a tailor-made administration module. Thus, it is a solution with a high degree of automation and a minimum of manual work actions when the company has to prepare a sales forecast.

The result

Greater confidence in the numbers

The company has been provided a tailored and automated solution. The forecast is now based on historical data combined with accessible data concerning future orders and is thus no longer just a qualified guess.

"The management has gotten completely different and greater confidence in the figures. And especially peace of mind that our forecast of expected business is more accurate", says the company’s sales director. "At the management level, we save some time on re-evaluating action plans, because we now hit it so right", adds the project manager.

Another benefit of the solution is a more nuanced insight into the order history and the actual sales during the course of an order, which for example, can be used, for example, for improved production planning and highlighting which parts of the business are doing well and which parts require increased sales efforts.

"We have become much better at servicing the organisation – and also our customers. For example, with the new sales forecast, we can tell our sales personnel when they can advantageously call out proactively to their customers and inquire about desired deliveries. We can do that because we now have a much better overview of the individual customer’s order history. For the customer, that means an extra service, because we often get in ahead of them and help in their planning. For us, it means more streamlined sales work", says the company’s sales director, and continues: "Looking ahead, we also expect to be able to use the tool to know when, for example, it can be worthwhile to raise or lower the prices. Because we now know the figures all the way down to the retail level and know when the demand matches the capacity, and when it does not do that."

To the question about why the choice fell on exacto as the supplier, the project manager concludes: "We know you (exacto, ed.), because you had done a similar project for us. You are skilful at what you do. At the same time, it means something for us that the sales forecast is a flexible tool, but based on standard technology, in which we work in a familiar format. It is easy for the users."