The Obstacle:
Choosing to design and make any product more than six months before it will get sold is a dicey proposition. Meeting demand that far in advance means the sales force has to have a solid view of what consumers want and when they’re going to want it.
If the tools sales reps are given to report what they do see are faulty, they will rebel. Or, at least, not comply with whatever demand-forecasting system is in place.
That was the case at New Balance. Sales representatives were given cumbersome spreadsheets to fill out. Those that bothered to actually participate in the ad hoc forecasting process often altered the sheets to make it easier or quicker. This meant New Balance ended up relying on mismatched historical data presented in Excel spreadsheets.
The lack of tools that worked the way its sales representatives worked—or that reported data the way New Balance needed—undermined the whole effort. Instead of getting 60 forecasts a month from sales representatives, only 20 out of 120 would report in. And even then, the data in the sheets could not be rolled up, because of the alterations.
The end result: excess inventory and an inability to produce and deliver the models, colors and sizes of shoes needed by retailers.
The Response:
Improve the Tools: New Balance implemented a demand-forecasting system that made it easy to enter data—and made it impossible to enter data in any manner that could not be collated, analyzed and redistributed effectively.
Take Time to Train: Familiarizing a sales team with how the forecasting system will work is always the first step. Teach how to enter and pull out data. Then make sure the salesperson’s willingness to comply becomes part of every performance review.
Make the Sales Force Accountable: Naturally, sales representatives tend to turn in optimistic forecasts, to maximize the amount of product on hand when a customer wants to buy. But excess inventory is costly. Reward accurate forecasters. Terminate wishful thinkers.
Collaborate With Customers: No sales-forecasting system works if retailers or other business partners aren’t consulted. Collaboration with retailers not only gives sales representatives more-accurate estimates of future demand, but an opportunity to describe new products coming on the market and boost orders.
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