Exploratory Investigation of Sales Forecasting Process and Sales Forecasting System : Case Study of Three Companies

Abstract: The future has always caught the attention of the human being. The thirst of exploring the future and to know the unknown has driven the human being toward innovativeness. Companies are expanding their operations worldwide since the past few decades. Profit growth coupled with an effective strategy has become the primary need of global companies. Research in this area has given rise to optimization of the supply chain for higher profitability. Considering the overall strategy the company needs to plan production well in advance. The operational planning comes in picture at this moment. In order to reduce excessive inventory at each stage of the production; one should know the demand of the next stage and preferably the end customer demand. The process of sales forecasting is undertaken to predict demand at different stages. It is a complex managerial function and hence needed to be undertaken by a scientific way. The sales forecasting the function includes process of forecasting, administration, hardware, software, users and developers of forecast. Historically sales forecasting has been considered as a side activity by most of the companies. Sales forecasting has not been considered as an important function of marketing and finance. Very few companies have seen sales forecasting by a scientific management point of view. Less research has been reported in sales forecasting in comparison to other managerial functions. Planning based on sales forecasting; may be part of a selected strategy for growth and profitability. These facts have attracted us to study sales forecasting as a managerial function. The purpose of this study is to describe and analyze the sales forecasting process, sales forecasting system, sales forecasting methods and techniques. Further proposing possibilities of improvements in existing forecasting process is also purpose of this study. We have selected three manufacturing companies for this study based on purposive sampling. Considering research interest in phenomenon study; we have selected a qualitative research strategy for this study. We have selected a case study method for our research as it is the most appropriate tool to study the relation between theory and phenomenon. For this research, we have collected the data by semistructured interviews based on a pre formed questionnaire. The questionnaire has been prepared with respect to our research purpose and open ended questions were used to gather extensive data. The data gathered during interviews, have been analyzed by the use of ‘Flow model’ suggested by Miles and Huberman (1994). Results from this study shows that there is a need to see ‘sales forecasting’ as a management function rather than a computer activity. To achieve the best information integration throughout the supply chain, increased information visibility is needed. To achieve accuracy in both forecasting and planning; collaborative forecasting may be used. Forecasting software needs to have a suite of methods towards product specific forecasting. The need of customized softwares has also been indicated by this study. The need to measure performance of forecasting by means of accuracy, cost and customer relationship has been concluded.