Steelwedge Software |
| Boost S&OP with Top-Down and Bottom-Up Strategy Posted: 02 Nov 2010 12:03 PM PDT Have you lost faith in Sales forecasts? Does Sales consistently over or under estimate future sales activity? A multi-billion dollar global manufacturer is struggling. Two divisions of the company are at odds on how best to achieve world class forecast accuracy. Regional sales account representatives provide forecasts well above historical sales levels. Why? Because inventories made available to each country are insufficient to meet market demand. The result: predict more sales to try to influence supply decisions and receive a greater portion of supply for your region. One division has decided that a centralized approach is best and is no longer considering regional sales input. The other division is moving to a collaborative S&OP approach where regional input is requested, evaluated and incorporated in the overall plan. Which method do you think will produce a better plan? Which method will distribute limited resources better? Which method will yield higher profitability? Time will tell for this organization. Yet, we can make a prediction today. Experience would suggest that a well-designed, collaborative S&OP process will produce better results. Here's how we look at how Top-Down and Bottom-Up S&OP drives better results. 1. Bottom-Up Inputs: Bottom-up forecasts are accumulated from many contributors. A distributed sales force may have hundreds or thousands of contributors. Each contributor has a specific area of expertise such as a specific customer, product or geographic area. The contributor enters her forecasts for her specific area of responsibility. Forecasts from all contributors are summed to capture an overall bottom-up forecast. 2. Top-Down Inputs: Top-down projections apply a more centralized view. A small number of forecasters will look at various inputs and generate forecasts. Influencing factors may include market data, economic indicators, and general product and customer… |
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