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Realign Sales and Operations with Profitable Forecasting

No company is immune to misalignments between Sales and Operations. Sometimes it even seems that Sales and Operations will never sync up completely.

It’s because the simple economics of supply and demand aren’t always so simple. Misalignment of Supply (read: Operations) and Demand (read: Sales) can cut into profitability—both short- and long-term. For example, when the Sales team overperforms during a quarter and Operations can’t keep up, you lose sales. Or when Operations teams produce too much inventory based on Sales forecasts that don’t come through, storing inventory can be costly.

The first remedy for these misalignments is common sense: Make sure Sales and Operations are communicating openly and frequently about forecasting expectations. But that will only get you so far. The second remedy takes a little more effort, but will deliver long-term profitability more predictably: Establish sales processes and forecasting tools through a coordinated Customer Relationship Management (CRM) system such as Salesforce.

Forecasting to End Misalignment

Misalignment of Sales and Operations can happen during times of high demand as well as low demand, and accurately anticipating sales cycles can sometimes feel like soothsaying. But the most common cause of misalignment is a simple lack of resources devoted to sales forecasting and operations planning.

Companies of any size fall quickly into “putting out fires” mode—chasing new leads, racing to fulfill backorders, hustling hot leads, or reallocating resources frequently. This mode robs resources from vital processes on both ends: Filling the prospects funnel for Sales and forecasting production expectations for Operations.

Forecasting with your CRM drives efficiencies of your workforce and supply chains, and those efficiencies drive profitability. That’s because using your CRM to its full potential always increases the reliability of forecasting and streamlines operations.

But to get accurate forecasting out of your CRM, you need to put the right information into it. This is often where opportunities can fall through the cracks. Sales and Operations are not set up for success because management hasn’t instituted comprehensive sales processes and CRM functions, or because they haven’t invested in automated data flow between their ERP and CRM systems.

Manufacturing Sales Forecasts

Using CRMs effectively to forecast sales cycles delivers many advantages in product industries. The physical demands of supply chains, logistics, and deliveries will be a constant for manufacturing products forever. And managing the ebbs and flows of labor demands will always be a challenge. When sales and operations are not aligned, for instance, production can get ahead of sales and suddenly you’re overstaffed.

CRMs in manufacturing have often been viewed as an “add-on” to network ERP systems. Many companies had them for years but didn’t understand how to integrate the Sales customer service element into production planning. Are you just taking orders, or are you being strategic with the customer service intelligence you gather? Or are you working new sales opportunities hard, but not preparing operations for when the sales hit big?

To maximize the productivity and forecasting gains promised by CRMs, you have to do the “dirty work” of properly managing the processes that support the CRM. And to do that, you first have to fully understand the buying processes, timelines, and growth trajectories that are unique to your business. The problem is, what information you know isn’t accurately captured in your CRM system for Operations to use productively.

It may be surprising, but even many successful companies haven’t studied their customers in enough detail to understand the buying process from buyers’ perspectives. They haven’t asked: Who is the primary decision maker? Who is the “point person” that can influence a purchase? What does my buyer really need to know before moving to the next stage of the funnel? How far in advance of need does the decision making process start?

The trick is, you don’t need to spend valuable resources to research your buyers’ tendencies. If you’re using your CRM correctly, those market intelligence insights will become obvious, your Sales forecasting will improve, and Operations will thank you for it.

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