SALES MONITORING SYSTEMS

The Advantages of Seasonal Adjustment

Most companies have sales that are highly seasonal. This makes discerning trends difficult.  Here are retail sales unadjusted. Many look at year on year comparisons, but an unusual value a year ago can be misleading.

We believe that the best approach is to seasonally adjust the data. We prefer to use the X12 Seasonal Adjustment code directly from the U.S. Census in order to take advantage of the latest enhancements and some of the adjustment options that the current econometric packages do not offer. In addition to the seasonally adjusted series, the X12 code can provide the seasonal factors and the trend/cycle components.

We have built automated routines in Visual Basic that handle the entire seasonal adjustment process seamlessly. The programs can export data from Access or Excel to the X12 code, run the X12 code, push the seasonally adjusted output to Access and Excel, roll the dates in the Excel Reports, and print the new reports automatically. 

Here is the same data series seasonally adjusted. We have also included a trend line. As you can see, it much easier to discern a trend.

The X12 code also supplies other interesting information. For example, here are the seasonal factors.

ARIMA Forecasts

The X12 code also calculates an ARIMA forecast to calculate the centered moving averages for the recent months. This produces more stable estimates for the end points that are less prone to revision in subsequent months. We have found that the short-term forecasts are surprisingly accurate and many clients like to have the ARIMA forecasts included in their reports.

Sales Targeting Reports

Most clients track their sales versus annual targets. We have developed a report that shows what monthly sales would have to be for the rest of the year in order to make the plan. The monthly targets are calculated by determining the straight-line growth rate that would be required on a seasonally adjusted basis, and then re-introducing the expected seasonality.

Momentum and Trends

Another tool that we have developed helps to show changes in momentum and turning points.

This momentum graph has two lines. Both lines show year over year percent changes, one is based on a 3 month moving average, the other on a 12 month moving average. When the 3/12 percent change is greater than the 12/12, sales are accelerating.

Automated Textual Analysis

We also have the technology to generate descriptive text automatically. For example, the following text was generated in Excel automatically.

Customization

The final report can be customized to your specifications. It can include other research that you use and can be made to match your other output stylistically. For example, we can adopt your layouts, fonts, and include your logo.