Sales and Profit Planning Using Top-Down and Bottom-Up Planning  

Purpose

Sales and profit planning typically involves both top-down and bottom-up planning methods. Firstly, management specifies (top-down) the sales and profit goals for the planning period at a high level of aggregation (such as at the customer group / product group level). The different sales representatives then plan (bottom-up) their sales volumes for their respective areas at a detailed level (such as at the customer / product level).

An ensuing analysis of planning shows whether the targets set by management have been met by the sales representatives, that is to say, whether both plans end with the same result. If this is not the case, the target values or the employees' planning data (or both) are adjusted in an iterative process until both plans tally.

It is typical for both plans to be based on past actual data. The following sections describe top-down planning and then bottom-up planning and the typical functions involved. For a better understanding of the planning process, call up a report after each planning method showing the effects it had.

Process Flow

You can find the data for this process under .

  1. Creation of a Plan Proposal by Management
  2. Changing Plan Quantity and Valuation Using Excel
  3. Making Price Increases Using Valuation
  4. Distributing Planning Results to Sales Offices
  5. Copying Management Planning for Sales Representatives
  6. Changing Sales Commission
  7. Distributing Planning Results to Customer, Product, and Sales Representative Levels
  8. Changing Plan Quantities and Revaluation
  9. Comparison between Top-Down and Bottom-Up Planning
  10. Resetting the Data