The forecast is not an end in itself. Forecasts of total industry sales and company sales should be the basis of a company's operating programme and its implementation. The sales forecast is the yardstick by which the company evaluates operational effectiveness. Forecasts are the principal tool for exercising the important management functions of : (i) analysis and measurement of market opportunities, (ii) planning marketing strategy and resource allocation and (iii) monitoring performance. If the sales forecast is short of the capacity to supply, steps have to be taken to strengthen the company's market position by stepping up promotional activities, reinforcing the sales force, reviewing the location and adequacy of storage, expanding the retail network and generally upgrading its organisation and motivating the marketing staff.
From detailed short and medium-term sales forecasts, the following operational plans can be derived:
a physical plan of monthly, preferably fortnightly, sales in terms of volume of each fertilizer type in each district;
a shipment schedule, if the entire or a substantial part of the fertilizer is imported, to arrange vessel arrivals as close to seasonal demand as possible. Landlocked countries require a longer time for imports to reach the field and careful scheduling can mean substantial savings by moving fertilizer direct from the wharf to wholesalers, thus avoiding intermediate storage and double handling;
a transportation plan aimed at the use of the most economical method. The sales forecast, indicating when, where and in what quantity the fertilizer is required should e used by the distribution department to estimate the weekly requirement of trucks and/or rail wagons. When transport is scarce advance reservation of trucks and rail wagons is needed for timely movement of the fertilizer;
a storage plan can be worked out from the data of expected sales in each district and the number of times stocks can be turned over. Positioning of stocks at proper locations avoids subsequent inter-store movement, double handling, loss of sales and unsold stocks. For cost control, storage space has to be minimised and locations of stores have to be optimised. This can be done with the help of the sales forecast;
an inventory plan can be used by producers to keep working capital within control.
Consumption of fertilizer is seasonal and takes place over a few months of the year.
Production of fertilizers being continuous and factory storage capacity being limited, forecasts are necessary for planning continuous stock movement to field warehouses. In the case of bulk blends and mixtures, production of the right grades according to crop and seasonal need minimises inventory costs. Raw material and packing material procurement should be scheduled according to the sales forecasts.
a retailer development plan, based on an analysis of the expected dealer activity in each district, identifying unrepresented areas and laying down targets for each sales officer;
a cash plan, reflecting the outward cash flow for raw and packing materials and inward flow of sales proceeds. This enables the company to estimate its working capital needs and arrange a bank overdraft;
a promotional plan setting out details of advertising and promotional efforts in various market segments, according to the market share objective and the need to develop new markets;
a manpower plan indicating the organisation as it exists and as it should be to meet marketing objectives.
A long-term forecast enables a company to:
assess storage needs and decide upon investment in building additional stores;
decide on investment to expand production capacity;
arrange long-term loans and equity funds for expansion;
recruit and train additional manpower for production and marketing.
