How to Improve Your Bottom Line with Better Forecasting

Better forecasting will help improve your bottom line. It will help you identify and act on emerging trends, streamline operations by identifying and correcting inefficiencies, and make better decisions for your business.

Better forecasting involves big data. It involves collecting information from across your business, combining your financial and operational data, and analyzing it in the context of larger market trends such as pricing, landscape changes, and more. It will give you greater insight into the past, the present, and the future. Having a solid understanding of what internal and external conditions you’ll likely face going forward will give you a competitive advantage in the marketplace.

Better Forecasting Means Better Data Collection

Better data collection is the first step in better forecasting. This usually involves increased automation and the use of software for data collection. An example of this would be Enterprise Resource Planning (ERP) software. It connects your business and improves data visibility in the real time. With an ERP, employees in your warehouse will be able to scan incoming items or ingredients in your warehouse or factory and the data will be almost instantly visible to management and anyone else who needs it, based on user permissions.

How to Make Forecasting Part of Your Business Cycle

Ideally, forecasting and data analysis should be an integrated part of your business cycle. As much as possible, companies should be forward-looking—interested not only in today, but also in tomorrow and long into the future. That requires good long term-planning, which in turn requires good data collection and good data analysis and forecasting.

Here are the steps you can take to make forecasting an integral part of your business planning cycle.  Please note that you don’t have to follow this process exactly. You can modify it to fit your needs or choose a different process entirely if it’s better for your business.

1. Identify Data Needed for Analysis

As the saying goes, “you can’t manage what you can’t measure.” The first step in better forecasting is to identify what data should be part of your analysis. Examples could include pricing data, lot information, economic trends, financial data, and operational data for your business.

2. Collect, Track, and Manage Data

Whatever the data is, you need to collect, track, and manage it. This might involve having employees scan barcodes, manually inputting lot numbers into your software, or tracking the spot price of manufacturing materials and fuel. Ideally, this data should be collected in one place for easy analysis.

3. Analyze Data

Now that you’ve identified and collected the data you need, the next step is to analyze it. This frequently involves building dashboards, reports, or graphs that plot the data over time. Raw data is often hard to analyze or understand. Part of data analysis involves identifying trends and drawing conclusions about what the data show.

4. Apply Your Findings in Your Plans and Budgets

The next step is to apply your findings. This involves incorporating them into your future projections and forecasts, including your planned projects and budgeting.

5. Execute Your Plans

After you create your new forecasts and budgets, you should put them into action. Move forward with your data-informed decisions while being prepared to change course if circumstances change. The market can change overnight, and it’s important for businesses to remain flexible. This is where having access to real-time data comes into play, since it allows you to make decisions on the basis of updated data, not last year’s, last month’s, or even last week’s forecasts.

How an ERP Can Help

An ERP installation can help. ERP software helps streamline your business. It automates data collection across your entire business. Many ERPs include pre-build dashboards and reports for easy data analysis, as well as additional Business Intelligence tools so you get the greatest possible benefit from your data. ERPs offer other benefits, including improved regulatory compliance and automatic fixed asset depreciation calculations.