TPM Talks: Forecasting Sales Using Shipment vs. Consumption Volume
In the TPM Talks webinar series, senior consultant Shatakshi Shekhar sits down with various consumer products sales and marketing subject matter experts to chat through some of the most pressing topics and challenges surrounding Trade Promotion Management in the industry today. The topic of this talk is shipment vs. consumption volume. Explore the free webinar download here and read a quick overview below.
Forecasting sales in a manner that produces worthwhile information starts with the input data. In order to optimize the effectiveness of sales forecasting, an organization must first determine what data will generate the most meaningful information for them and drive efficiency for them– this means looking at shipment vs. consumption volume.
Shipment vs. Consumption Volume
Shipment volume is the volume that the manufacturer ships out, whereas consumption volume is the volume that is consumed by the end user. Fundamentally, there’s a lag between the shipment volume and the consumption volume – what’s being shipped isn’t necessarily being consumed at the same time, and sometimes the shipment volume may go through a distribution channel, so there’s an additional layer there to consider.
Shipment volume is typically used to drive supply forecasting and consumption is usually involved to drive demand forecast, so when it comes to TPM planning and execution, consumption volume is typically the preferred data; however, there are some challenges.
Challenges with Volume Data for TPM Planning
Shipping volume, for the most part, is a bit easier for the manufacturer to get – they have direct access to what’s being shipped out, how it’s being shipped out, and the shipment patterns. Consumption volume, on the other hand, is a bit trickier, as manufacturers must depend on outside sources and syndicated data sources to get their shipment information. These factors, in addition to others, can make it difficult for organizations when it comes to TPM planning.
So, what is best practice when it comes to leveraging the right type of data for forecasting? What’s the right approach…or is there one?
In this webinar, I’m joined by volume expert and principal consultant Raghu Narayan as he walks us through common dilemmas surrounding shipment vs. consumption volume and our recommended best practices for clients.
Download the 5-Minute Shipment vs. Consumption Volume Video
To learn more about our Trade Promotion Consulting services, connect with us today.
Be sure to check out our other TPM Talks:
- Episode 1: The Importance of Incorporating TPM in Sales Forecasts and Demand Plans
- Episode 2: Planning TPM with Indirect Customers
- Episode 3: Involvement of Shopper Marketing in TPM Planning
- Episode 4: currently viewing
- Episode 5: Approaches to Reporting in TPM Systems
- Episode 6: Customer and Product Hierarchy Changes
- Episode 7: Loading Historical Promotion Data into a New TPM System
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Contributions from Raghu Nayaran
