Sales planning is part of corporate planning and includes the determination of which products are to be sold within a certain period of time. It is therefore an essential basis for further corporate planning, since capacity utilisation, staffing requirements and thus investment needs as well as financial requirements depend on the sales plan, among other things.
Sales planning and sales forecasting are often confused or not clearly separated. While sales planning describes what is to be sold, sales forecasting tries to determine what can be sold. In sales planning, there is a regular tendency to overestimate sales opportunities. On the one hand, to meet the expectation of the management level and, on the other hand, to ensure that the sales department is supplied with sufficient product quantities and can reliably use sales opportunities.
Make a clear distinction in your processes between sales planning and sales forecasting. There can be considerable differences between planning and forecasting, from which consequences for the entire corporate planning must be derived. This is especially the case if the values of the sales planning are significantly higher than the values of the sales forecast and as a result there is a danger that investments will be initiated, and expenditures made that cannot be financially supported by the sales that can actually be achieved.
To ensure the necessary checks and balances between the two perspectives, we recommend that sales forecasting be the responsibility of supply chain management, while sales planning is regularly done by sales.
Regardless of whether a Sales and Operations Planning (S&OP) process is installed in the company:
Compare sales planning and sales forecasting regularly, ideally monthly, but at least quarterly. Also derive measures that bring sales planning and sales forecasting closer together to avoid both “over-planning” and “under-forecasting”. To see whether the “truth” lies more on one side or the other, you should compare both perspectives with the actual sales volumes.