Unlock agility and cost control with automated forecasting

Direct materials budgeting and forecasting is a financial planning process for manufacturing organizations. Budgeting sets cost targets for raw materials and components, while forecasting estimates future expenses based on demand, pricing trends, and market conditions.

Since direct materials typically represent 60-80% of manufacturing costs, this integrated approach is essential for cost control, cash flow management, and profitability. Sievo streamlines this complex process, providing agile and accurate planning capabilities that improve collaboration between procurement and finance teams. 

Direct Materials Budgeting & Forecasting solution includes automated scenario creation using real-time price and volume data, collaborative adjustment tools with audit trails, variance analysis comparing budgets to actuals, Purchase Price Variance (PPV) forecasting, and what-if scenario modelling. These features enable procurement and finance teams to track performance, identify cost drivers, and simulate potential market changes. 

Automated forecasting improves accuracy by integrating cleansed data from multiple sources - including historical actuals, contract prices, and volume plans - eliminating reliance on outdated spreadsheets. Automation reduces human error and enables supplier-level granularity rather than just category-level analysis.  

For more advanced implementations, solutions can also incorporate market indexes and Bill-of-Materials data to further enhance forecast precision. Unlike many in-house tools that only forecast at category or material level, automated solutions can provide supplier-level insights, delivering more comprehensive and accurate financial projections. 

Cost forecasting for direct materials is the process of estimating future material expenses by combining price projections with volume plans. Organizations typically base price estimates on historical data, contract terms, or market indexes, while allowing procurement professionals to apply expert adjustments. This provides full visibility into expected costs for financial planning and budget management.

Direct Materials Forecasting solution creates forecasts by automating scenario generation, allowing companies to anticipate future direct material expenses accurately and plan accordingly. 

Cost control for direct materials requires continuous monitoring of actual spend against budgets and forecasts. Key practices include variance analysis to identify cost drivers, Purchase Price Variance (PPV) tracking to measure procurement performance, real-time analytics to highlight exceptions, and scenario modelling to test potential market impacts. This enables teams to address deviations before they affect profitability. 

Yes. Sievo Direct Materials Budgeting & Forecasting leverages AI and machine learning as a core part of the platform to ensure the accuracy and reliability of your forecasts. The solution combines AI-driven data management with configurable, rules-based forecasting logic. AI in direct materials forecasting primarily automates data classification, cleansing, and enrichment from disparate sources, ensuring clean, consistent data for reliable forecasts.

Sievo combines AI-driven data management with configurable, rules-based forecasting logic. This hybrid approach provides the precision and auditability finance teams require while leveraging AI's efficiency for processing complex procurement data. 
 

Sievo Direct Materials Budgeting & Forecasting is designed to forecast spend for all raw materials and components used in manufacturing physical goods. These solutions are particularly valuable for global manufacturers managing thousands of SKUs across multiple production sites, involving numerous stakeholders, and consolidating data from various ERP systems into a unified forecasting process. 

Sievo Direct Materials Budgeting & Forecasting integrates with existing systems through pre-built connectors to major ERPs like SAP, Oracle, and Microsoft Dynamics, plus cloud platforms including Snowflake and Azure. 

Automated data pipelines ensure consistent data flow without disrupting workflows. The solution can connect to virtually any system where your procurement data resides. If your data exists in a machine-readable format, Sievo can integrate it. This capability eliminates manual data transfers, reduces errors, and creates a comprehensive budgeting process with no system replacement required. 

Sievo Direct Materials Budgeting & Forecasting solution is designed to integrate with any data sources relevant to your organization's needs, including historical spend data from ERPs, volume data from MRP systems showing production plans, and price data from contract databases and market indexes. By combining these sources, the platform provides a complete view of material costs with supplier-level granularity.