The planning and budgeting process provides decisions across the organization, requiring a deep understanding of the methodical activities and authorizations followed by a typical CPG or a manufacturing company. Finance leaders who follow this sequence find it easier to deliver long-term value creation:

Step 1: The company leadership and the executive committee discuss organizational goals and business expectations about 4-6 months before the start of the planning year. This is the discussion for the Annual Operating Plan and is based on new product launches, inclusion of new market and plans for existing market share expansion. A strategic plan emerges from these discussions. At this stage, forming a cross departmental executive committee led by CFO’s office is key to success.

Step 2: The executive committee with the CFO’s office prepares a 1-to-3-year strategic plan with revenue, cost and profit targets. This is followed by two activities:

• Basis the business expectation and goals shared by leadership, the executive committee provides its recommendations and feedback to the CFO’s office for revisiting the enterprise level SWOT.
• In coordination with departmental/ functional managers, a data sharing matrix is envisaged, detailing the type and granularity of data to be shared with departments and individuals.

Step 3: The executive committee completes SWOT analysis (based on high-level revenue, profitability and capex and opex and manpower plan) with an aggregation at corporate level, and a break down at business unit, zones and product and channel combinations. The guidance on Annual Operating Plan and a Strategic Plan is then finalized.

Step 4: The business unit/ zonal managers share the Annual Operating Plan and Strategic Plan with the Sales and Marketing function and other related departments such as production and finance. Feedback from the departments is analyzed and passed on to executive committee which may then revisit the Strategic Plan.

Step 5: Sales and Marketing teams devise their zonal plans or customer-wise product mix, etc. The Sales Plan is finalized after incorporating plausible changes suggested by the executive committee. Plans are then aggregated at the business unit/ zone level to create a corporate level plan.

Step 6: Once the demand is finalized, business units/ zones create their plans across production, material requirement, purchase, capex, IT, HCM, etc.

Step 7: Once the executive committee and CFO’s office receives data from business units/ zones it is verified with respect to:

• Pricing of products
• Impact of promotion on volumes
• Cost per unit for variable cost line items
• Capture and allocation of fixed costs
• Authenticity of the numbers
• Completeness of data
• Relevance of data

Step 8: The CFO’s office prepares an income statement and does a profitability analysis of planned numbers. The planned numbers are evaluated against the goals/business objectives setup by the executive committee, which then provides its recommendation to business units/ zones (if deviation occurs).

Step 9: Business units/ zones review the recommendations and incorporate it in consultation with the executive committee and CFO’s office to finalize the plan.

Step 10: The finalized business unit/ zone and aggregated corporate level plans are sent to the CEO’s office for approval.

Step 11: Once CEO approves the Annual Operating Plan and Strategic Plan, the executive committee consolidates all planned numbers (making changes if suggested by the CEO).

Step 12: Following approval from CEO, the plan is sent to the board for approval.

Step 13: On approval, the plan is published and locked for the future performance management.

Step 14: The CFO’s office reviews the plan monthly and compares budget vs. actual. The reasons for variances (on feedback from respective departments) are analyzed with action items. This is reviewed with the business for root cause analysis and shared as input for the rolling forecast.

Step 15: Board, executive committee, management accounting department and GMs review the plan every quarter/ month as per the industry to forecast/re-forecast for the remaining period of the year.

Step 16: On review the root cause for deviation (both favorable and adverse) are incorporated as feedback for the next planning/forecasting cycle as corrective actions as relevant

How ABC Limited used the Intelligent Planning and Performance Management model – An illustration how short term Capex and Production decision can be logically derived through Intelligent Planning��

ABC Limited is in glass bottle manufacturing for one of the leading global beverage manufacturers based in the UK. ABC Limited wants to evaluate its production capacity monthly against the demand plan and take decisions if the capacity is short or in excess.

ABC Limited has three product lines, each having 3 SKUs. The production plan is done based on the sales budget—which may require realignment based on any production constraints.

These steps explain the method for production realignment decisions. With ABC Limited the production order flows through three sub-processes (Furnace, Melting and Forming):

Furnace: Practical capacity of each furnace is 12 tons per batch with two batches per day. If any furnace line faces capacity constraint (cross 100%) as per production schedule, unutilized production capacity of previous period (weeks/ days) can be leveraged by realigning production schedule.

Melting: Practical capacity of each melting pot (2 dedicated melting pots for each category) is 201-meter cube. There is a need to test whether input from furnace (irrespective of realignment) exceeds maximum practical capacity of melting pot. If capacity is exceeded, the plant must go for a new installation.

Forming: Forming lines are interchangeable and the Pressure per Square Inch can be reconfigured as per the requirement. Hence, at any point of time, it can be changed as per the input from upstream production processes.

With ABC Limited, the Intelligent Production Planning model consistently re-evaluates future product demand vs. resource availability and reconfigures the operational/ production plan to maximize profitability.

How organizations can benefit from the Intelligent Planning and Performance Management model

91����’s Intelligent Planning and Performance Management model centralizes all structured and unstructured data into a single source of truth, and provides these additional benefits:

• Flexible production scheduling to address constraints
• Precise phasing of capex decisions
• Decentralization, enabling departments to become responsible for their budgets
• Complete control over workflows with configurable business processes
• Change from manual spreadsheets to automated forms/ reports streamlines processes and reduces errors
• Ability to accurately analyze costs and base decisions on causal modeling scenarios
• Ability to trace back all costs transparently
• Allow the organization to determine which best practices are required to enable further process improvement

CPG and Manufacturing organizations wanting to create dependable macro level production planning can be sure to gain the ability to optimize their production schedules and manage constraints to determine impact on their bottom lines with 91����’s Intelligent Planning and Performance Management.

Author:

Rajarshi Gupta
General Manager – Data
91����

The post How the CPG and Manufacturing industries can improve outcomes using an Intelligent Planning and Performance Management model appeared first on 91����.

The shortcomings of existing methodologies

• Traditional Planning and Performance Management processes are a minefield of challenges.��
• They are manual, slow and prone to human mistakes.��
• They also present the difficult task of integrating scattered and non-standard data from varied upstream source systems.��
• The process is tedious but, more importantly, it does not allow teams to account for changes in business scenarios (new product introduction, new pricing strategy, non-availability of raw material/ talent, etc.). Without this capability, no business can respond quickly and accurately.��
• Workflow limitations in existing systems are an additional problem. These result in situations where accountability of various functions remains obscure.��
• Modern businesses also need to allow various users to access the data simultaneously and work in collaboration to drive consensus. These challenges and needs are becoming the prime drivers for organizations to re-visit and upgrade their Planning and Performance Management systems.

Depending on the type of industry – B2B, B2C Manufacturing or FMCG—an organization can change its planned numbers every quarter, if not more often, making it imperative to have sufficient dynamicity and flexibility in the planning and budgeting process.

Budgeting and planning data can be made most effective when it is distributed across business units. While this is necessary, it presents a security challenge. Organizations would like to make certain the data is made available on a need-to-know basis with adequate security and access controls.

Leading practices for tomorrow’s organizations

Figure 1 provides a comparative overview of traditional/ archaic/ poor practices versus common practice and leading practices including the involvement of reporting, forecasting and rolling forecasts. The figure shows the processes modern planning and management practices must possess.

Figure 1: Leading Practice

Many organizations invest considerable energy in identifying and listing the best practices most suited to their strategic objectives. The list can be dauntingly long. However, there are a set of practices that cannot – and should not – be ignored. These are central to dependable and reliable Planning and Performance Management that meets future needs:

1. Ensuring corporate objectives are aligned with the organization’s budgeting process: This calls for transparent two-way communicable between the strategic planning function and the budgeting procedure. The goal is to map high-level organizational objectives with resource allocation. To achieve this, an organization should:��

• Formulate processes that allow top management to collaborate with teams directly involved in the day-to-day functioning of the organization.
• Maintain a transparent and fluid flow of information across functions that participate in the budgeting and planning exercise—maintain a uniform level of understanding of strategic goals and explicitly state the roles each team plays to fulfil the goals.
• Drive clarity of vision so that departments produce their budgets inclusively rather than in seclusion, leading to better coordination of tactics and support activities amongst the functions.

2. Designing comprehensive budgeting procedures to ascertain desired results: A typical planning and budgeting exercise recognizes the factors vital to a company’s success and the ways in which those factors relate to the KPIs which measure business growth. Another way to look at them is as Business Drivers which can be further categorized as Revenue Drivers and Cost Drivers. Budgeting processes must be designed to ascertain these by:

• Acting as a “sanity check” for the strategic plan, allowing only those procedures that turn plans into action.
• Associating planned objectives with optimum resource allocation for process management. For example, if a target objective for a manufacturing organization is “less than1% defective products”, the drivers for achieving the same will have to be “ensuring stringent and state-of-the-art product quality tests” and “keeping track of products sold vs. products returned or repaired”.
• Preventing functions from becoming over burdened with procedures and unnecessary levels of granularity. These end up making processes cumbersome without adding significant value. For example, budgeting at a project/module level is always better than budgeting at an individual line-item level.
• Maintaining proper documentation with guidelines, accurate timelines, clear objectives, and appropriate resource assignment to enhanced efficiency and increased accountability.
• Creating driver-based planning and rolling forecasts. The absence of rolling forecasting results in hiding the true picture leading to incorrect conclusions and decisions.
• Integrating rolling forecasting with a driver-based approach by leveraging both financial and operational data to achieve optimal effectiveness of budgeting practice.

3. Activity-based budgeting approach: Activity-based budgeting is derived from activity-based costing. Activity-based budgeting establishes the relationship between resources and activities and maps it to cost objects or services. This provides the actual cost for each object or service and aids in eliminating hidden costs, preparing accurate budgets and assigning accountability to managers who have control over the resources. Activity-based budgeting leads to:

• Optimal needs-based assignment of resources.��
• Clarity on most and least expensive products/ services, providing visibility into real product/ service profitability.
• Assessment of the existing efficiency of the organization, leading to decisions around capex investments or disposal.
• Determination of appropriate cost baseline—which can be influenced through process or technology that reduces the effort for the activity.

These best practices, especially those with a 3-month rolling forecast, provide a dependable way for CPG and Manufacturing organizations to navigate volatile business environments. They are necessary to lay the foundation for realistic and real-time Planning and Performance Management.

• Learn about intelligent Planning and Performance Management to gain total operational control and agility
• Learn about the sequence of activities and authorizations of a typical planning and budgeting process of a CPG or Manufacturing company following industry leading practices

Leverage intelligence to improve your Planning and Performance Management — download our whitepaper now!

Author:

Rajarshi Gupta
General Manager – Data
91����

The post Overcoming the challenges of conventional Planning and Performance Management through leading best practices appeared first on 91����.

The post Intelligent Planning and Performance Management to gain total operational agility appeared first on 91����.

Marketing and Trade Planning Needs to be Real-time and Data-Driven

By the time the organization works with distributors to collect data and plan a marketing and trade promotions campaign, markets have changed. The organization then puts its plans on hold while it comes up with better options. There is a need for systems that allow planning to be dynamic and execution to be fluid. 91����’s Intelligent Planning Platform for CPG organizations fills the gap. It enables high-impact near real-time data-driven planning that is focused, relevant, detailed, fluid and keeps the entire organization in synch with campaign goals.

Empower CPG Marketing Leaders with Intelligent Planning Platform��

The Intelligent Planning Platform serves as a digital nervous system to support marketing plans and execution. It tells marketing executive what to do, when to do it and why to do it. It can preempt markets by providing real-time visibility into what is happening in sales, marketing, trade promotion, schedules, volumes and the strategy of competition. Basically, it tracks and analyzes every parameter key to CPG CXOs.

It’s a Connected Platform:��

The system harmonizes processes across different parts of the organization that work together to deliver success. It keeps master data available to everyone such as distribution, marketing, communication, purchase, and finance, playing a pivotal role in converting information into plans. Its real-time dashboards assist in precise decision-making at velocity.

Enables Real-time Communication with Stakeholders

Success in fast-moving—and fast-changing campaigns—depends on the efficiency with which communication is maintained in real time with internal and external stakeholders, distributors and customers. The platform keeps the entire marketing ecosystem in synch.

Dynamic Planning, Execution and Decision Making

It is important to have plans defined and based on data. But it is equally important to have a system that can respond to change and manage quick course corrections. Our Intelligent Planning Platform allows teams to change decisions around everything, from volumes to SKUs and pricing. The system then provides the means to re-optimize the plan and follow through on the execution.

The world of CPG has been transformed over the last few years. Today, it has multiple ways to connect directly with the customer, collect an increasing amount of data and analyze it in real time. It now needs a system that can act flawlessly on the market signals. Our Intelligent Planning Platform is precisely that system. It supports high value planning and decision-making. It prompts and manages quick adjustments in execution. And it ensures that marketing dollars deliver target ROI.

91���� has implemented intelligent planning platform for Leading CPG Business. We implemented an Integrated Trade Marketing & Distribution Planning to Accelerated Speed to Market. To know more about our Intelligent Planning capabilities for CPG industry read our whitepaper “Intelligent Planning – The winning tool for CPG Business in the Digital Era”

Author:

Debjit Banerjee
VP, Business Consulting,
91����

The post Using an Intelligent Planning Platform to guarantee marketing success appeared first on 91����.

“Automation” is the way forward into traditional application maintenance and support (AMS) and take it to a new level of support. With one critical decision to automate AMS, businesses can minimize or eliminate teasing tech problems and stay focused in their business. Importantly, the decision delivers cost reduction, it consolidates fragmented operations, eliminates process gaps, and maximize productivity. Even better, the decision comes with a bonus: By focusing on automation, businesses can continue with their existing applications and processes without sacrificing user experience.

Automated AMS (AAMS) is an 91���� solution based on decades of AMS experience in the F&B, retail, manufacturing, BFSI and the travel and hospitality industries. AAMS is a quantifiable and customizable approach that comes with guaranteed increase in Net Promoter Scope (NPS), resource(s) optimization and cost reduction based on client base. Much to the relief of CTOs, AAMS also has the power to eliminate the dependence on vendors, unleashing flexibility.

91����’s AAMS offering is focused on improving three key vectors: Customer Experience (via an emphasis on self-service), Operations Optimization (to impact efficiency) and business value services (increased effectiveness) with strong experience SLA’s (XSLA’s) which are beyond regular SLA’s. Experience SLA’s can only be offered by providers with strong domain expertise, efficient service model and automation complimenting each other.

Using highly sophisticated domain-centric playbooks, knowledge repositories, accelerators, application optimization techniques, and self-healing bots. The solution deploys customizable Integrated Design and Development Platform (IDDP), a feature of the AAMS offering, that eases the application build and release process as self-service function.

With IDDP, clients can release applications with over >95% confidence and replace their weekend release schedules with any-time-of-week three-hour release plans. Clients can also leverage a large portfolio of assets and solutions around application optimization, co-Innovation, cloud native applications, and more.

The AAMS portfolio offers customized services around:

• Accelerated Transformation
  • SAFe agile AMS transition
  • Co-innovation charter
  • Cloud native application transformation
  • Application optimization
• Operational Efficiencies
  • Automation led shift-left approach
  • AI-based resolutions and recommendations
  • User persona-based BOT assistance
  • Transparency through business metrics dashboard
• Customer Experience
  • Self-service and self-healing
  • Process and knowledge assistants
• Business Resilience
  • Business metrics-led support services
  • Tool based application assessments and insights
  • Incidence avoidance through monitoring and AI

A feature of the AAMS that our clients like—aside from the IDDP, Chatbots, and more—is the Customer Value Realization. This is a dashboard that extracts learnings from monitoring the existing applications. It helps answer questions like, “Who uses application & which function? When is it used? what is the value realized?” This analysis allows clients to determine and introduce new features while retiring those that have outlived their relevance.

However, the feature that tilts clients into choosing our expertise is that the automation provides an accelerated start, allowing us to acquire and shape data from legacy systems (such as those that may be in use for supply chain functions) and pump them into modern downstream mobile applications, portals or other digital platforms.

Bundled with features that make AMS simple and cost-effective, AAMS is the logical future for businesses that need to constantly improve their applications across sites, generating value for managements for the investments made in maintaining applications.

Co-authored by:

Ashok MVN
Technology Partner – ADM
91����

Divyadarshan Jannu
Solutions Lead
91����

The post Taking AMS to the new level with automation appeared first on 91����.

Airlines have multiple brands and a host of alliance partners that make planning complex. A small change can have a large impact on flight schedules, fuel costs, workforce availability, passenger safety, etc. Practically every function—from Human Resource to Finance, Sales & Distribution, Commercial & Planning, and Maintenance, Repair and Operations—is affected by change. But airlines are unable to control and mitigate the impact this has on customer experience and bottom lines. This is because each function is siloed and spreadsheets continue to be the most popular way to manage processes. The result is slow, error prone decision-making. This puts accurate financial and operational planning beyond the grasp of most airlines.��

Progressive airlines are using connected planning to drive accurate & precise financial & operational planning.

A connected planning platform ensures that teams across functions can collaborate in real time. These platforms help them get away from their spreadsheets that are incapable of drawing insights from the billions of data points that airlines generate. Instead, the connected platform uses analytics and forecasting models to drive accurate and precise financial and operational planning in real time. 91����, leverages its partnership with Anaplan, a leader in the connected planning space, to deliver cloud-based pre-built airline-specific solutions that improve visibility into operations, boost productivity and lower costs.

There are airlines like AirAsia Expedia that have greatly benefited from an Anaplan-based solution. The FP&A head of Expedia says they are now doing scenario planning and sensitivity analysis for the whole business across Asia and dynamically understand where the business is and where it’s going.

Effective planning by connecting applications and functions across the business using connected planning

Our experience shows that airlines recognize the urgent need for connected planning but are hesitant to adopt the solution. They feel they are already using other, more traditional systems that have been around for ages, which can eventually be leveraged to improve financial and operational planning. This is understandable, especially as the industry is cash strapped and going through an extremely challenging phase. There can be no doubt that traditional systems have served their purpose. But today, they impede speed and agility because of their siloed nature. Anaplan is the only platform that can bring about effective planning by connecting applications and functions across the business.��

91���� is a Strategic Partner for Our Clients on Connected Planning��

91���� with its domain expertise in airlines, CPG and manufacturing and its strategic partnership with Anaplan has built a Center of Excellence focused on Intelligent Planning and Execution with 50+ certified Anaplan consultants, 10+ solution architects & master Anaplanners, 60+ deployments across 22+ use cases. We offer services from strategy, implementation and managed services for the planning solutions and also help customers setup & scale their own Planning CoEs.��

Our 3*3*3 Approach to Jumpstart the Program and Scale With Additional Use Cases

91���� can use its expertise to identify potential use cases aligned to your airline’s business objectives and set up 3 day, 3-week and 3-month pilot programs. The pilots will demonstrate proof of value and define a future roadmap. In the next 3 to 9 months the implementation can be scaled based on use cases and target ROI.��

Our experience in creating Financial and Operational planning solutions across diverse industries has shown that starting cautiously works. It leads to a better understanding and appreciation of the potential that connected planning holds. If you want on-the-fly adaptability, improved decision-making, and accurate scenario planning to guide your airline business, a connected planning solution is an essential ingredient of success. For more information please read our Connected Planning Turbocharge the Airline Growth Powered by Anaplan

Author:

Amit Paul
GM, Intelligent Planning and Execution
91����

Peeyush Goel
Industry Consulting Head – Travel
91����

The post Airlines With Accurate On-The-Fly Financial and Operational Planning Are Taking Off for Growth appeared first on 91����.

Revisit workforce planning and give it a 21st century makeover.

Studies show that 69% of organizations say that workforce planning is a priority, but only 44% are engaged in it. The impact of this is widespread. Poor workforce planning lowers productivity, demotivates employees, adds to the cost of re-training and leads to loss of customers. Workforce planning must be able to deliver short-term decisions without compromising or losing sight of long-term business goals. One way to achieve this is to leverage a platform that links employee data with business planning, talent strategy and headcount planning (with a granular location-wise view) that combines everything with compensation planning.��

Use Anaplan’s Workforce Planning Module to Achieve Substantial Improvements in Workforce Planning

Using a platform like Anaplan—that orchestrates information, data, models and scenarios to deliver insights and forecasts—businesses can avoid being handicapped by talent gaps or by burgeoning payroll bills. Our Workforce Planning solution on the Anaplan platform has demonstrated that businesses can bring about substantial improvement in their workforce planning.��

The results of workforce planning achieved by the manufacturing client and the FMCG client are replicable. This can be achieved through:

• Data integration across HRIS, HCM, CRM and ERP systems into a Central Data Hub for planning
• Connected planning and real time collaboration across HR, finance, and business units to deliver precise and timely supply of talent across locations and business groups
• Scenario planning through real time simulations of business environments that provide insights into workforce requirements, wages and benefits – that eventually flow back to annual budget planning
• Embedded intelligence that uses data to predict attrition and optimize workforce mix, headcount capacity and capability plans based on needs and constraints

Making workforce planning a strategic imperative for today’s businesses to manage uncertainties.

Organizations that focus on the above factors move their business from basic budget-driven headcount methodology to an integrated, data-driven planning mechanism that finds instant acceptance within user groups.

Using our solution clients can expect to optimized workforce and associated costs by up to 0.25%, boost workforce planning productivity by as much as 50% and improved forecasting accuracy by up to 20 percentage points.��

Workforce planning which has become a critical function given today’s business uncertainties, talent deficit and competition. Future-focused businesses must eliminate the use of outdated manual processes for the function. They must—sooner, rather than later—choose a true data and technology-driven enterprise-wide planning platform. Click here to know more about our workforce planning solution.

Author:

Amit Paul
GM, Intelligent Planning & Execution,
91����

Rahul Lalwani
Senior Consultant, Intelligent Planning & Execution,
91����

The post Workforce planning for business agility appeared first on 91����.

The Covid-19 pandemic has put immense pressure on the retail sector.

Stores are struggling to get their workforce in place, adjust quickly for frequent and unexpected lockdowns, re-assign employees between locations and ensure that day-to-day operations run smoothly.

Given the uncertainty and volatility in the retail space, workforce scheduling must be responsive demand based. For example, if a store has low footfall between 9 and 11 am on weekdays, store executives, cashiers, backroom clerks and managerial staff must be adjusted accordingly. If it has high footfall between the same hours on weekends, extra hands must be available.

Workforce management in retail is a complex task based on time of day, day of week, holidays, festivals, special promotions, seasons, weather, purchase behavior, employee qualification and availability.

Poor forecasting and errors in rostering – currently done in most retail stores using spreadsheets – can cause excessive overtime payouts, regulatory violations, poor quality of service and lost sales. On the other hand, using the right tools can result in fair scheduling.

Workforce Planning is the key challenge for CHROs in Retail.

The surge in online shopping also poses a fresh challenge, making it necessary to improve in-store experience. One study has shown that about 40% of CHROs consider workforce planning as the top challenge and consider business insights driven workforce transformation a top priority. The simple way out is to invest in an intelligent workforce planning solution.

91���� offers an intelligent workforce planning solution based on the Anaplan platform. It leverages data for dynamic and automated scheduling of staff while adhering to labor laws, organizational policies, employee preferences and forecasted footfall. It can re-distribute staff across stores based on predicted footfall—something that managers cannot do accurately using manual methods. Our solution introduces scalability, agility and flexibility into staffing processes, ensuring fair scheduling that employees love.

Our intelligent workforce planning solution has a proven track record.

It has optimized workforce costs with 100% visibility on talent requirements for a leading global organization with 20,000+ employees in over 60 countries. A workforce productivity solution along with a scheduling solution has enabled a 30% jump in sales productivity for another customer.

Retailers using our Anaplan-based solution can expect a host of benefits that include:

• Optimize costs with 4% to 12% saving in resource expenditure.
• Optimized staffing to reduce costs without compromising quality of service across stores
• Data driven planning for optimal scheduling
• Just-in-time resourcing to meet unexpected surge

Precise workforce management is what your business needs. Our solution is cloud-based and scalable and powered by Anaplan partnership. It has high availability and ensures that retailers do not have to maintain or upgrade their systems. The solution is designed to prevent under and over staffing and ensure your customers remain happy. Click here to know more about our workforce planning solution.

to learn more about how 91���� and Anaplan have partnered to solve this problem.

Author:

Amit Paul
General Manager, Intelligent Planning and Execution,
91����

The post Intelligent workforce planning in retail: Path to lowering costs and keeping customers and employees happy appeared first on 91����.

Some months ago, a European leader in roofing and waterproofing solutions received an order for an e-commerce warehouse. Such a warehouse typically runs into several square kilometers of roofing. Hence it would count as a prized order. This is more so if the solution provider has deep experience and has multiple plants to address demand spikes at short notice.

Here, the solution provider had a 150-year-old history with over 125 manufacturing facilities in 40 countries producing 27,000 products. And yet, despite these advantages, meeting the order proved to be an inordinately challenging task. This is because of the following issues:

• Fragmented Supply Chain: The provider had grown through several rapid acquisitions—with each acquired company operating as an independent entity having its own business culture, processes and nomenclature for products
• Internal resistance: For the business, it has been very difficult to communicate and coordinate production across these entities to meet any ambitious business order
• Lack of alignment: This would impact at site level or company level and lead to low performance levels

The company quickly recognized that the problem needed to be addressed. Today, using technology, it has harmonized processes and functions as an integrated entity. Making accurate demand forecasts and creating precise production plans have come within its grasp.

This European roofing and waterproofing specialist, that is a client of 91����, is not a unique example. There are scores of organizations whose awkward business structures hinder operational efficiency and business delivery. Examining the underlying challenge faced by this organization, and the systematic approach used to create a solution, offers insights that can be useful to any manufacturing entity.

Challenges faced:

We will begin with the barriers the client faced in exploiting the full potential of its manufacturing capability. Many of these are familiar to manufacturing businesses:

1. Unstructured Demand Planning: Aside from being independent run, each of the 125+ plants had its own method of forecasting demand. At least one of the 125+ plants used only an Excel worksheet (manual). Some even less (gut feel if you were wondering)! Usually the planning tools were rudimentary, and all were offline making collaboration impossible.
2. Non-standardized Hierarchy: Although the plants sold the same products in different markets, each plant used a different nomenclature for SKUs and could not clearly or reliably communicate requirements across plants.
3. Sales driven forecasting: Even with a vast catalogue of 27,000 products, the business could not take last-minute orders as demand forecasting and planning was sales driven. The fragmented nature of the business meant that it was perpetually in firefighting mode.
4. Speed to market based on just-in-time manufacturing: There was uncertainty around the location and timeliness of supply of raw materials, parts and products.
5. Lack of Integrated Supply Chain: The plants, spread across geographies, did not have a unified collaboration platform – this resulted in the business being unable to leverage the real production capabilities it possessed.
6. Inadequate investment in training and resources: Most employees in the planning function were production planners, not demand planners. Their understanding of demand planning needed enhancement using data and analytical tools. Also, the client could not dedicate many resources to demand forecasting.
7. Tight Planning cycle times: The client did not have the luxury of using 10 to 15 days, that is normal for most other businesses, to come up with demand forecasts. They needed forecasts created in 2 days.
8. Inaccurate forecast changes: Planners were unable to figure out whether sales director inputs were introducing any bias in the system and reducing the overall accuracy.
9. Inaccurate monitoring of all SKUs and stock levels: Inventory forecasting and demand planning becomes much more difficult when stock levels are hard to monitor or lack visibility. Without easy access to stock level reports a business can quickly build up unnecessary excess stock levels or they can have stock outages as demand spikes for specific products.

Implications of Inaccurate Forecasting:

Not solving the demand forecasting problem had serious consequences which were as follows:

• High Inventory: Due to inaccurate sales predictions many plants ended up with higher production than could be absorbed by their markets.
• High Cost: Finished goods had to be kept in warehouses, adding to cost overheads.
• High Risk of Scrapping: Roofing material is prone to deterioration when in storage, resulting in waste and loss.
• High Inventory Hold: Finally, every business wants to avoid keeping capital locked in inventory.
• Increased Expediting Costs: Also underestimating demand can cause inflated expediting costs to secure the rapid supply of raw materials.

Solutioning by 91����:

When 91���� was brought in to provide the tools and systems to overcome the challenges, a global demand planning template was created on the Anaplan cloud planning platform (you guessed it, cloud makes real-time collaboration effortless).

The solution was designed so that the client could do the following:

• Analyze historical sales
• Perform statistical forecasting
• Make necessary adjustments to the generated forecast
• Compare budget vs forecast and
• Measure the forecast accuracy at various levels

To meet the diverse requirements of the client, for every role and responsibility, the Anaplan solution had to be enhanced and re-engineered. Our Anaplan experts had to decide which components to use, which to modify and where to apply automation.

What emerged was a solution designed for users who had no prior expertise in data science that demand forecasting traditionally calls for. To assist the team, algorithms had to be created that used the best parameters to automatically generate forecasts. Now, when team members log into their systems, they have immediate access to accurate, data-driven demand forecasts they can use with confidence.

The machine generated forecasts can be adjusted in real time using human judgment and intuition. Forecasts can be evaluated for accuracy and are visible across the entities of the business. Orders, now based on an 18-month rolling forecast, can be farmed out accurately while an additional layer of analytics enables leadership to monitor country-wise performance.

If a forecast proves to be flawed, planners can dig into the root cause of the failure and identify if the wrong algorithm was used, if the sales inputs were poor or the marketing intelligence was imperfect.

Benefits:

Currently the solution has been rolled out in 7 of the 40 countries the client operates in. The result of using technology is evident due to following benefits:

• Forecast accuracy has improved by 5% overall.
• Planning cycle times have reduced from 12 days to 2 days.
• Lost sales have been reduced by 10 % overall.
• The client now has access to granular and accurate forecasts and there is substantial improvement in visibility into the demand.
• It can now collaborate in real time between sales and supply chain teams using the cloud platform.

The single takeaway, for 91����, from the engagement has been that changing planning cultures is difficult but using technology to design solutions that account for user maturity levels makes it easier. The solution needs a user-centric approach to succeed.

Author:

Pavan KM
Lead Consultant, DATA
91����

Rajeev Charaliyil
Sr Project Manager, DATA
91����

Gayithri Krishnamurthy Joise
Sr Project Manager, DATA
91����

The post Enabling Data-driven Demand Forecasting Across Fragmented and Disconnected Markets appeared first on 91����.