Data Driven: Responsive Forecasting
Control buying (or repurchases) is a vitally important function for many direct marketers, and using a forecasting report with an order curve history will make this task easier and more efficient. Keep in mind that the more volatile the product line, with multiple colors and sizes, and the longer the vendor lead time in replenishing orders, the more important control buying is. An order response curve provides the buyer with an effective tool to project total sales of any individual item and to manage inventory on a week-to-week basis during the selling cycle.
For instance, the order response curve report chart could represent individual items, rather than a complete marketing campaign. Let's assume that Item A has an average selling price of $100. The responsible buyer notes that 1,000 Item A's have been sold heading into the week of Nov. 13 from both mailed campaign drops. Based upon the original plan, 770 Item A's should have been purchased by this point. If Item A is readily available for repurchase (does not need to be sourced from afar), the buyer can supplement the original PO and meet the increased holiday demand.
The curve also could help if some products are behind forecast. As soon as under-forecast response is quantitatively confirmed, the responsible buyers should cancel hold-for-confirmation orders and start planning how to dispose of overstocks. Your finance department will appreciate the forewarning on a revised plan mid-campaign. Cash flow, end-of-year reporting and overhead costs are all affected.
Using forecast curves to reasonably manage the business from a sales, cash flow, inventory and temporary staffing perspective allows you and your organization to take advantage of business opportunities, as well as solve issues before they become major obstacles. If only all business tools were so effective.
Philippe Graner is director of marketing strategy at the Mission, Kan. direct marketing agency J. Schmid & Associates. He can be reached at firstname.lastname@example.org.