What is an Aggregate Forecast?
An aggregate forecast plays a pivotal role in the planning process of a company to help boost sales and aid in overall growth. It is primarily used for estimating sales and to help categorize products and product families that a company or firm exclusively manufactures. It is usually presented in units, revenue, or sometimes both.
Importance of Aggregate Forecast in E-commerce Shipping and Delivery
The aggregate forecast is vital to the planning of sales, production, and sometimes even operations to boost productivity and profit. Here are some advantages of aggregate forecast:
- To become successful and stay relevant in the market, companies are always planning forward. Aggregate forecasting is also an essential part of this planning process. Companies require a significant amount of lead time to prepare and implement their plans.
- An aggregate forecast helps determine what the company’s capacity requirements are. They may include the amount of product required as well as the strategies needed for its production.
- Aggregate forecasting also helps companies to restrategize during this period. They can adjust activities affecting costs, allocate resources, utilize capacities and labor requirements and build customer relations.
How Aggregate Forecast Works and Its Prerequisites
An aggregate forecast helps companies plan to prevent incurring any losses as well as optimize work efficiency in order to garner the highest amount of profits. Its prerequisites include:-
- Determining demands
- Adjusting labor requirements
- Managing inventory
- Managing external factors
Use Case With Aggregate Forecast
An aggregate forecast is used as a sales forecast for a product category or consumer group. A company may use it as
– a forecast of every product they manufacture, every type of customer within one region to aid in the planning process of sales and operations, or
– an annual or budgetary period forecast.
As a significant part of planning, they allow you to compare ongoing plans with annual operating plans and set an appropriate budget in accordance.