Advances in technology have made forecasting the future a more reliable endeavour than ever before. In the business world a standout example is ERP software. Enterprises of all shapes and sizes with ERP now possess the power to make forecasts with an incredible degree of accuracy. In fact, if you’re the owner of an ERP system and are not taking advantage of its forecasting capabilities, you’re almost certainly not using your ERP solution to its full potential.
If you’re a wholesaler, manufacturer or distributor, proper use of your ERP’s forecasting functionality will lead to better managerial decision-making. The more well-informed your business decisions and strategies are, the brighter your business’s future will be.
This is because the typical modern ERP system solution relies on a centralised database. The database stores huge volumes of data from various business functions. By connecting all core business units together (eg finance, sales, inventory, warehousing) in the one unifying platform users can share data, collaborate effectively and base business decisions on information that is centralised, comprehensive and easily accessible.
Prior to the advent of today’s powerful ERP system, an organisation’s business data was typically scattered throughout different software applications. The lack of integration meant that it was virtually impossible to gain a 360 degree view of a company’s performance. Now it’s a different story altogether.
Today, ERP‑driven business forecasting leverages historical data to predict how the business will perform in the future. Data from each relevant business unit feeds into the forecasting mix, giving you a broad view.
But it doesn’t end there. In addition to historical data already contained within your ERP solution, you can also add various sets of external data to improve forecast accuracy. Examples might include anticipated future customer demand trends, expected new government policy impacts and other changing conditions that can be expected to play a role in future business performance.
So what types of forecasting might it be worthwhile to carry out? Let’s look at three of the primary ones.