As we get close to the end of the year, plans need to be made for 2026. Getting the right amount of inventory produced and into the stores, at the right time, is one key element of success for a producer. Easy for us to say -- challenging for you to execute.

Your sales people play a key role in how much inventory should be produced and when it needs to be ready to go. They should understand the market and anticipate what your customers will require, before they even know they need it.

Forecasting volume accurately is science and art 

It is a challenge to determine how much product the market will require. Your sales people do have some facts that they should be able to access to help with the forecast. They also should have a feel for the market and customers. This combination of facts and feel is the science and the art.

The science

You need accurate data in your business. Start with sales history. Seasonality impacts the sales of many fresh products. Often a full year of volume sales will be needed before you can predict the future. The best sales history is by customer and by item in your business. Often there are different dynamics going on with each of these, so it pays to focus on both. Use the history, with adjustments for recent trends to begin the planning process.

If you do not have sales history, you will have to resort to forecasting sales by point of distribution until you build the history. This method involves looking at the number of stores/locations where your product is for sale and forecasting the units per store/location per week or per month.

Recent trends can have a big impact on the volume you need to produce. Every category is different so you should decide what “recent” looks like for your business. You should also factor in the overall trends for the segments of the market in which you are listed. NielsenIQ and other data-focused companies share information about sales trends. Recently I was at an event where they shared information about the growth of club and discount, at the expense of conventional stores. You should factor this type of information into sales forecasting. If your products are only available in conventional stores, and they are down two per cent (which is a lot of dollars), your volume could be down just because there are fewer people shopping in these stores. Your sales people should be trying to qualify this information at a granular level. 

Another fact to consider in forecasting sales is service level. If you had some issues where product did not get into the market on time you might have missed some sales. Assuming you have the issue fixed, your sales people should account for this in forecasting.

Sales are impacted by many factors. Some are within your control and some might be your competition or your customers. Your sales people should be keeping notes throughout the year that become very useful when forecasting the future. If your competition over invested in the summer this could have impacted your volume. A growing year with low yields can impact your sales history. If you know you could have sold more you need to capture that information. 

Industry trends, consumer trends and customer sales are often available through trade publications, Farm Credit Canada and industry associations. If you are selling through the large, publicly traded retailers they report their sales every quarter. Costco reports them every month. 

The art

Now the fun begins, and this is where your sales people should add value to the process. Market knowledge, category expertise and customer relationships are something your sales people should have. They need to develop this knowledge over periods of time and ChatGPT will not help you much here. Your sales people need to be out in the market, talking to people in stores, at the office and in the industry. 

They should be collecting information all the time that will be relevant when it comes time to build a sales forecast. A packaging supplier revealing that your competition doubled their order or people in stores sharing that your competition has been having service level problems are valuable insight to be considered in sales forecasts.

An accurate sales forecast/demand plan is a business win

Your sales people should not be doing this in isolation. Every department in your business should be involved. If you plan an aggressive consumer marketing push in Q2 then your sales forecast should reflect some return on that investment. If your production people say that the volume could increase 10 per cent with a new growing technique, they need to deliver the 10 per cent increase.

Every part of the business should have input on sales forecasting. Ultimately, your sales people need to deliver the numbers, but everyone should be motivated to achieve these forecasts. Sales people become disengaged when the production part of the business wants to produce 15,000 units when the sales people are convinced the maximum is 12,500 units.

Accuracy should win over exceeding the forecast

This is a fine line. Most people are motivated by exceeding expectations. The challenge becomes when the actual exceeds the forecast, and the business has to either scramble to get product produced or disappoint customers. When I was at Loblaw we worked hard to get better at the seasonal ups and downs in different departments. Floral was one department where we would have huge swings in sales, week to week. Valentines’ week was 10X an average week. The first couple of years we did not forecast accurately, and we were scrambling and seemed very busy. Working so hard to ‘make it happen’. As we improved our forecasting and got prepared properly it did not seem like we were that busy, but sales did much better. When you are prepared and have everything in place to deliver a strong sales number, you have done the work in advance and have the people in place. It seems less of a rush, but we definitely served customers in the store better and maximized the opportunity. 

Talk to your customers

I would always encourage producers to initiate the conversation with your customers and that starts with you providing a number or forecast. There is nothing worse than a supplier coming into a retailer expecting them to have all the answers. It is your business so take the initiative. No doubt they will have some perspective on where sales are going and probably help you make your forecast more accurate. When your sales people have thought through what the numbers will be, your customers will respect you for doing the work and understanding your business with them.

If you are delivering direct to stores (DSD) you really need accurate forecasts. You are responsible for keeping that shelf full. You need to know what is required before you go to the store. 

If you are delivering to the warehouse do not just accept every purchase order you receive. Check the orders relative to your forecasts. If they are not aligned something is happening. Buyers are an entry level position in most large retailers. They change often and they are depending on ‘the system’ to predict the volume they need. If you are concerned it is too much or not enough, try to talk to them and determine why. There could be a very good reason such as your farm is profiled in the ad flyer and they did not tell you, so they require twice as much as a regular week.

You can’t always predict everything, but an accurate sales forecast should ensure your business maximizes opportunities. It will also ensure you have the best chance at getting all of the inventory into the market when and where it is needed.