How can ERP forecasting improve business efficiency?

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Forecasting in ERP helps extrapolate current data to forecast future trends.

Forecasting is a mathematical concept that helps estimate future trends based on current data. It’s an essential tool as it allows companies to brainstorm effective strategies and shape business plans according to changing customer needs and market dynamics. Enterprise Resource Planning (ERP) software already has a significant data repository that has a vast collection of:

a. Customer data

b. Competitor data

c. Market data

d. Applicable government norms 

The forecasting module in ERP uses these data points to estimate how the market is shaping up and what the company should do to maximize profits and cut operational costs.

This article will shed light on the different kinds of forecasts the ERP software can make.

1. Forecasting module in ERP helps make financial Forecasts.

Financial forecasts help companies to estimate:

a. Revenues

b. Profits

c. Product demand

d. Changing customer buying habits

With financial forecasts, businesses can create their budgets and determine where to invest and save costs. It also impacts the initial quote and service charges. 

Also Read: How CFOs Are Forecasting Sales Amidst The Pandemic?

2. Forecasting module in ERP helps make demand forecasting.

Demand forecasting helps companies predict which product is more likely to be purchased and which one will lose its appeal. In effect, demand forecasting allows companies to increase the production of those products whose demand will soar and discontinue manufacturing those that will experience a slump. 

ERP software forecasts demand based on the following factors:

a. Geography

b. Demography

c. Behavior

d. Psychography

e. Past purchasing pattern

f. Customer buying habits

The ERP software also analyzes the sales pipelines that help determine which quotes are more likely to convert into orders.

3. Forecasting module in ERP helps make supply forecasts.

Supply chain forecasts determine:

a. The time it takes for raw materials to reach the companies’ inventory from the vendor. 

b. The time it takes for finished products to reach the market from the manufacturer’s warehouse through the supplier/distributor.

The factors that enable supply chain forecasting are:

a. Shipping schedules

b. Public holidays

c. Natural calamities like Covid-19

d. Weather reports

e. Union strikes

f. Time taken in previous deliveries

g. The lead time promised by the supplier

Also Read: Why the sales forecast is an important metric to consider even before engaging your sales team in actual sales?

4. Forecasting module in ERP helps schedule jobs.

Job scheduling has emerged as one of the most critical components of forecasting recently. The ERP software schedules jobs in the following ways:

a. Sends alerts and notifications to employees describing when and where they need to be present.

b. Arranges the required raw materials, tools, and equipment.

c. Performs automated recoveries and restarts in case the system fails.

d. Generates audit trails for maintaining regulation compliances.

e. Produces reports of incidents.

5. Forecasting module in ERP helps integrate data for external sources.

Data sources can be classified into two categories:

a. Internal data sources: Internal data sources include data that is stored in companies’ systems across various departments, such as:

i. Finance

ii. Sales

iii. Marketing

iv. Supply chain & logistics

v. Warehouse

vi. IT

b. External data sources: External data sources include data that is stored in repositories outside the company, which includes:

i. Government data

ii. Stock exchange data

iii. Reports published by international institutes like UNO, WHO, etc.

iv. Researches published by scientists regarding climate change

By combining both the internal and external data sources, the ERP software gains a broader lens to forecast changing trends and patterns.


Remember that forecasting depends on AI and ML algorithms that become better as the amount of data increases. Companies need to be patient as the forecasting ability of the ERP software requires substantial time to produce top-notch estimates. But once there is enough data, the forecasting module in the ERP software will contribute to business efficiency significantly.

At Sage Software Solutions (P) Ltd., we are home to world-class ERP software and CRM software that will solidify your business tech support fundamentals and enable you to build a customer-centric organization. To know more about it, SMS SAGE to 56767. You can also write to us at

Disclaimer: All the information, views, and opinions expressed in this blog are those of the authors and their respective web sources and in no way reflect the principles, views, or objectives of Sage Software Solutions (P) Ltd.

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