Full Project – THE EFFECT OF FORECASTING TECHNIQUES ON SALES PERFORMANCE
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CHAPTER ONE
INTRODUCTION
Planning is an integral part of a manager’s job. If uncertainties cloud the planning horizon, it can be quite difficult for a manager to plan effectively. Forecasting help managers by reducing some of the uncertainties, thereby enabling them to develop more meaningful plans than they might otherwise. A forecast is a statement of the future. At one time or another, we have all witnessed different sorts of forecasts that were flops, even though most of the time the forecasts are closed in predicting what the actual result will be. Forecasting sales and productivity is a lot like forecasting the weather. In both instances, there is no such thing as a sure bet. Predictions usually turn out to be in the ballpark, but occasionally they miss the mark completely. Moreover, in both instances, the forecasts serve as a basis for planning. However, weather forecasts influence travel and recreation plans, choice of clothing each day and whether to walk or ride to places. Farmers rely on weather forecasts to determine when to plant and harvest and when to take precautionary steps. In businesses and organizations, forecasts are the basis for capacity planning, budgeting, sales planning and so on.
Subsequently, forecasts play such an important role in the planning process because they enable managers to anticipate the future and to plan accordingly. In a sense, there are two uses for forecasts. One is to help managers plan the system and the other is to help them plan the use of the system. Planning the system generally involves long-range plans concerning the types of products and services to offer, what facilities and equipment to have, where to locate and so on. Planning the use of the system refers to short-range and intermediate-range planning, which involve such tasks as planning inventory and workforce levels, planning, purchasing and production, budgeting and scheduling.
However, this project work looks into the effect of forecasting techniques on sales and productivity, how they affect production, planning and control, how the sales and productivity level is affecting the manager’s decision on whether to increase output and whether to provide more motivational incentives in order to improve productivity. The forecasting techniques we apply on sales and productivity help in providing the manager with basis on how he can plan the future, the nature of future sales, how sales can affect the production decisions and what will be the sales functions of the organization.
There are many different kinds of forecasting techniques available and no one technique works best in every situation. When selecting a technique for a given situation, the manager or analyst must take a number of factors into consideration. However, the two most important factors are cost and accuracy. How much money is budgeted for generating the forecast? What are the possible costs of error and what are the possible benefits that might accrue from an accurate forecast? Generally speaking, the higher the accuracy, the higher the cost, so it is important to weigh cost – accuracy trade- offs carefully. The best forecast is not necessarily the most accurate or the least costly, rather, it is some combination of accuracy and cost deemed best by management.
A close look to this project work shows that forecasting techniques have an effect on the future sales performance of an organization, most especially confectionary firms. Future decisions on production are affected by the level of sales performance; this is why the project provides detailed information on how managers can base their decisions on sales performance by forecasting the future of the two functions.
The project is designed to help managers, writers and researchers operating in this sector or business have a good insight on how sales can be forecasted to provide them with the necessary information that will help them in taking future decisions. This can further be observed or justified when we consider how other large scale organizations are using various techniques to determine the future of their sales performance, how forecasting can make an effect on the sales performance and what will be the position of sales and productivity in years to come.
The study also shows the various forecasting techniques available to the manager. How can organization select the best technique among the techniques available to it. by means of considering accuracy and cost associated with the technique, rather, it is some combination of accuracy and cost deemed best by management. Since the project work is on the effect of forecasting techniques on future sales performance of an organization, the need to select the best technique to suite this problem has also been considered.
A great number of organizations have failed in their ways of applying a forecasting technique that will provide the required and accurate result. The problems associated with forecasting techniques have been difficult for some organizations to identify, which led them to choosing the wrong technique and as a result, they fail. The major problem associated with forecasting techniques is the problem of knowing the historic data of that particular event one is basing his forecast. This is so because many techniques depend on historic data.
There is also the problem of selecting the accurate technique that goes with time. This means the technique has to be timely and at the same time accurate. This problem is so alarming because the organization that wrongly chose the inaccurate technique will have a devastating negative effect. The result can not be reliable and cost is also incurred. This study made a close evaluation of the problems associated with forecasting techniques on future sales and productivity, most especially, in foods and confectionary firms and lasting solutions have been provide that will guard against these problems.
Any work that is been performed has a purpose or objective for such task. This project work can’t be an objection to this assertion. The objectives of this study is to examine the different forms of forecasting techniques, there effect on performance. It also study the concepts of forecasting techniques available and how they affect the decision made by various organizations.
This study is also concerned with the importance of forecasting techniques on the sales and productivity of confectionaries, how it affects their decisions in terms of future decision making either on sales or future productivity. It helps the organizations to make an effective decision that will guide them in attaining their future objectives.
It should also be noted that the project aimed at bringing out clearly the differences between sales and productivity in an organization. The two concepts are very crucial to existence and future decisions of any organization. At the end of it all, the study will provide scholars, researchers and students with a tool for forecast on future sales and productivity.
In the course of the research, the following hypotheses are going to be tested.
Ho: That forecasting technique can’t effect on future sales performance.
H1: That forecasting technique can effect on future sales performance.
The significance of this project work is to help researchers and organizations to know the kind of forecasting techniques available for them to choose when ever the future sales and performance is to be planned. This will help organizations and the best way of making a choice among the various techniques available, considering the strength and weakness of any technique, good choice can be made.
The scope of this project work is limited on Richbite and Confectioneries, Kaduna. Indeed, notes shall be provided where they appeared to be relevant with fast foods production or information about the companies operating in this industry.
However, information is also provided on how the different sections of Richbite are coordinated together working as sub-systems to enhance performance and productivity in order to achieve the overall organizational objectives.
In the process of writing this project work some difficulties were faced, parts of the problems encountered include the following:
- One of the most challenging aspect of this work was that of my respondents. This was a problem to me because most of the staff in Richbite were not ready to give the right information while some of them were feeling reluctant to respond.
- Another problem I faced in the compilation and gathering of the necessary information to make this project a reality was that of untimely passage of data. the respondents were not giving me the right information at the right time. This prevents me from completing my work within the stipulated period of time.
- There was also the problem of financial constraints. My effectiveness and efficiency was hindered due to financial shortages. The financial back-up I need to enable me complete this work at the stipulated period of time was not enough.
- The project work also suffered the problem of unavailability of the information needed to complete the work. Some of the information are not readily available, indebt research has to be conducted and comparisons between relevant data and the topic of discussion has to be made through literature review to enable me come up with something tangible.
HISTORICAL BACKGROUND OF RICHBITE AND CONFECTIONARIES
Richbite and confectionaries is one of the name making confectionery firms in Kaduna state, with a capacity of satisfying more than six hundred (600) customers per day.
Established on February 10th, 2005 at Lamido Road Off Sultan Road. The company is now relocated to Sokoto road; this is in respect of their need for capacity building. According to the production manager, their present location is larger in terms of size and more pron to market opportunities. Richbite and confectioneries concentrates mainly on the production of fast foods like the meat pie, spring rolls, burger e.t.c. On establishment, they started with restaurant services and wedding catering services. As time persisted, they introduced fast foods, which further extended their name and market opportunities.
At an infant beginning, the company started with 12 number of staff with a production manager and a director. Then, they were able to satisfy 50 – 60 customers per day. The company continued to grow in size and capabilities. There growth depended on plough back of profit. However, the organization has four major departments. The production department, the personnel department, the account department and the marketing department. The production department is responsible for production functions, with respect to the information provided to it by the marketing department on customer needs and taste. The personnel department on the other hand, is in charge of recruitment and placement of new member of staff, while the account department is responsible for all financial control. They source finance receive sales, they make budgets and also advice the management on financial matters. The marketing department is responsible for market survey and research to know the customer’s needs in terms of taste and prize. This information is therefore provided to the production manager who will work with it.
With perseverance, hard work and commitment, Ricbite and Confectioneries has a total capacity of satisfying more than six hundred customers per day and with a total workforce of 30 members of staff.
- Sales: This can be defined as the total amount of goods or services disposed by an organization in terms of monetary value.
- Performance: This is also defined as the ability of a concept, staff or an organization to discharge an action over a period of time.
- Production: Is defined as a process of sourcing raw materials process them under the required atmosphere or condition into finished products and distributing them to the end users.
- Productivity: Is the ability of a staff or an organization to perform its duty in the right manner and at the right time.
- Techniques: This is also defined as the skilled way of doing things either using tools or personal intuition.
- Forecasting: Is the ability to use past data with present happenings and tell what will likely happen in the future.
- Forecasting techniques: This is defined as the ability of using statistical tools to study occurrences and tell what will likely happen in the future.
- Planning: Is a process of setting future objectives and the possible ways of achieving them.
- Control: Is the process of monitoring performance on the plans to make sure that work performed is in accordance with plans so as to achieve the desired objectives.
- Sales Performance: This is defined as the collection of the total sales made by an organization in terms of monetary value over a specified period of time.
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Full Project – THE EFFECT OF FORECASTING TECHNIQUES ON SALES PERFORMANCE