It can be hard to make predictions – especially about the future, and this is especially true in today’s pharmaceutical and life sciences market. Predicting the future is tough and rolling forecasts are becoming a popular way to address this; particularly in dynamic and volatile industries such as life sciences.
To implement a successful rolling forecast:
- Outline your objectives, clearly – this can include driving growth, reducing costs, maximizing customer retention, optimizing headcount and others.
- Frequency and time horizon – The time horizon can change as the company changes. To choose the appropriate forecasting cycle and time-frame, you need to consider the availability of resources as well as the pace and volatility of your business.
- Driver based – One proven method of ensuring your rolling forecast is efficient and accurate is to leverage driver based forecasting. With this approach, updates are focused on the key data or drivers that determine the key financial outcomes of your company, instead of updating each line item in your budget. With a driver based model, you can account for the most critical variables that impact finances, allowing you to forecast finances strategically and in a way that focuses on material changes.
- Focus on the process – You need to consider the strategy and process for implementing rolling forecasts within an organisation, so you can ensure consistency and buy-in across all departments. The process needs to be efficient, easy to implement, and encourage collaboration and participation throughout your organisation.
- Encourage participation – To ensure accuracy, your financial team needs to encourage participation from throughout the company. Utilizing cloud-based planning and forecasting software is conducive to this aim, as it provides convenient access to reports and planning templates for all participants in the process.
- Align all company goals – Integrate operational and financial planning together, so the forecasts are representative of the entire company.
- Find a system that works – The success of rolling forecasts largely depends on the system you’ve implemented. If your company is relying on Excel and email, you can anticipate your forecasting process to be tedious and prone to inaccuracy.
To learn more about how to apply driver-based planning techniques, check out the Inspired Intelligence Solutions website. Or alternatively, why not have a conversation with one of our consultants? Simply fill in the form below and someone will reach out to you.