From a business perspective, who is responsible for the final result for demand forecast? When we say “finally”, we mean the pile of excess inventory. The answer is the sales manager. This is a bit strange, but let’s talk about it in detail.

All forecasts are wrong, which means that when the demand forecast is made, it is destined that some products will be wanted by customers but we have not planned for them; some products will be planned but customers do not want them. The inherent deficiencies of planning need to be compensated by execution. The inventory has been built and the children have been born. Whose execution is needed to make up for it? Sales execution.

In a sense, the task of sales is to sell what customers don’t want. If customers need something, they will naturally find us, just like you girls. No matter where that beautiful skirt is hidden, you can always find it on the Internet and buy it at the risk of losing your money. The task of sales is to sell you things you don’t need. Of course, you know that we are joking, don’t take it seriously.

If the sales manager is not responsible for the final result of demand forecast, the plan will habitually become a scapegoat for unsatisfactory sales performance. I believe everyone is familiar with such a scene: the manager asks sales, why did not sales target this year? The first answer of sales is that we don’t have what the customer wants, and some of our customers don’t want it. For example, once, one supply chain director complained that his sales always complained that the customer wanted wine A, but we only had wine B. But think about it carefully, what’s the problem? As a good salesperson, you will say this: Wine A and wine B, 99.9% are water and alcohol, wine A can kill people, and wine B can also kill people. How about this, I will give you a 5 cent discount, and you can buy wine B.

When the sales manager is ultimately responsible for the demand forecast, he will drive his sales to make up for the shortcomings of the plan and solve problem on excess inventory. Otherwise, stagnant inventory is a challenge. For example, after a company introduces a new model, there is always an inventory backlog of old models: the sales indicators are sales and gross profit margin, and the gross profit margin of old models is low, so no sales are willing to sell them. But the problem is that if these old models are sold in time, they can be discounted by 20%; if they are kept for three or two years, no one will want them even if they are given away. Faced with a large amount of stagnant inventory, planning and product management are overwhelmed, but in the meeting to discuss stagnant inventory, there is no trace of sales. Performance appraisal drives employee behavior. If sales are responsible for inventory, that is, the final result of demand forecasting, and inventory backlogs are 100% a cost of sales, reducing their gross profit margin, I believe that sales behavior will be completely different.

Of course, some people will ask, sales is responsible for the forecast results, so what if planning doesn’t work hard? This is easy to solve. If planning is not done well, a lot of stagnant inventory will be generated. Whoever did it will pay for it, and the planning function will be punished first, such as losing half of the bonus. But the final solution to the stagnant inventory still has to be found in sales, because once the inventory is formed, it is like a child born, and planning and supply chain can only hold and raise it; even if it is given away, it must be given away by sales.