Bridging the planning silos in a FMCG company
At a group of breweries we achieved a substantial decrease in throughput time and effort for the planning process. At the same time we improved the accuracy of the planning process by making planning information available between different functions in the value chain of the brewery.
- Decreased the throughput time for the 3 Year Plan and budget, from 3 months to 5 weeks;
- Improved consistency across functions and accuracy of the total planning process;
- Accommodate a monthly forecast process.
Vision & Approach
Together with the controlling team we designed a planning model in which different functions throughout the organization contribute to the overall plan based on knowledge and insights in their own field of expertise. The purchase manager is asked what price he could negotiate for raw materials based on the volumes provided by the sales managers instead of being asked to fill out cost line items for his cost center. To bring this design to life, we implemented Hyperion Planning and trained the users in the different functions.
- A dynamic planning solution that immediately reflects the impact of changes throughout the value chain;
- Freeing up planning & control resources from low value-adding activities;
- Scenario planning and analysis capabilities to support decision making in a dynamic environment.
Proactive position management for a pharmacy multinational
People are the key assets within most companies around the world, especially in knowledge driven industries like pharmaceuticals. Planning based on headcount can be very volatile even when the staff turnover is low. There are always promotions, job rotations and transfers taking place. This makes headcount models very sensitive to changes, requiring a lot of maintenance.
- Decrease the adjustments needed to keep the plan up to date; positions only move to another department in case of a reorganization and are far less volatile;
- Stop the need to get a position approved over and over again after a person leaves: If a person leaves the department the headcount becomes zero, whilst a position can stay but is set to ’Open’ as long as there is a vacancy. This means that the managers don’t have to ask for budget for one and the same position again and again;
- Improved accuracy and alignment with the business.
Vision & Approach
Together with FP&A and HR, we developed a position based model instead of a headcount based model. This is making the integration with the HR system smoother and allows the user to analyze the capacity available, open positions and transfers.
- Planning model supporting the process within the company, giving clear insight into approved positions versus unapproved positions;
- A dynamic planning solution based on parameters and positions, without the hassle of an headcount model;
- Better integration of source, planning and budgeting system.
Global Support Chargeback Model for an oil multinational
The global support departments of a large oil company; IT, Housing, HR and Telecom made their own Revenue and Expense Budget. These expenses were also booked as cost in cost centers that utilize the services of each support department.
This process was not integrated and therefore there would always be a gap between expected internal revenues and internal cost as budgeted by each cost center. Furthermore it was impossible to analyze any mismatch.
An integrated planning model was built, in which the support departments could plan their costs and revenues and local cost centers could plan their needs, such as number of PC’s , lines, m2, etc.
Based on a complex chargeback mechanism, the internal costs were automatically calculated and presented to the internal customers (local cost centers). After agreement the costs and revenues were translated to specific general ledger accounts and loaded into the SAP financial system.
The introduction of this integrated chargeback model made it superfluous to submit the data more than once. Although some allocated costs were still subject to discussion, both parties were talking about the same figure.
Strategy integrated in the sales planning process at an international apparel company
For a global brand in the apparel industry a model was created to support their strategic choices, focusing on the core collection to enforce their image, which in turn should create a spin-off to the casual lines. Converged targets were set on an aggregated level by sales directors with the bottom up planning process per customer by the sales reps.
- Support the sales reps in their ability to forecast and plan their sales based on the new grouping of the products;
- Support the managers in different countries to meet their goals, by creating real time insight into the status of sales per customer and sales representative;
- Support the corporate strategy to focus on the core collections.
Vision & Approach
The strategic choices to focus more on the core collection were enforced by making sales reps, managers and regional directors aware of these choices throughout the sales planning process. By delivering historical data based on the grouping used in the new sales forecast model, the sales reps were supported in creating a forecast in line with the corporate strategy.
During the sales cycle the actual orders were matched on a daily basis with the forecast data to create a realistic insight into the feasibility of the targets set. The sales managers were able to see which part of the customers was visited and the value of the orders connected to these visits. A good estimation of the customers not visited yet could also be given. This gave the sales manager the possibility to intervene in a timely manner to adjust either the way of working or the forecast to come to a plan with a high predictive value.
- The strategy was supported by the planning process for the first time;
- Target setting was supported by the new forecasting model. A model was created that converged the target set on an aggregated level by sales directors with bottom up planning per customer by the sales reps;
- Through a daily order matching process, products that weren´t sold frequently enough could be taken out of the collection at an early stage, giving the sales reps the possibility to offer their clients a good alternative, thus decreasing the number of cancellations dramatically.
Profitability and Cost Management
Integration of profitability management and planning will add value to your organization in more than one way:
Business cases created based on TD ABC parameters are more reliable;
Time Driven Activity Based Costing allows deriving parameters for specific combinations of products, channels and customers out of a huge amount of transactional data. These fact based parameters can be re-used in business cases and scenarios. This fact based approach adds enormous value now this information is available in comprehensible format.
Delivers a higher predictive value of the cost and revenue in the future: facts versus assumptions and politics;
Ask (almost) any call center manager how many employees are needed for next year and there is a good chance that the answer will be the same: “more!”. Imagine they are experiencing busy times with people being sick or close to a burn-out and their answer is understandable. But what would happen if their estimation would be based on sales volumes from the sales team and facts on how many calls they receive per product group/per channel? Integration of this information would deliver a better insight in the expected workload and lead to better decisions.
Makes the budget more meaningful, it focuses on operational information that is better understood than financial data by most of the planners;
Compare the situation in which the purchasing manager is asked to fill the P&L for his cost center with the situation in which the purchasing manager is asked for his expertise: “What price can you make if you have to purchase 2 million kg of hop for the following breweries in the coming year”? This sort of question really triggers his expertise and his answer will add more value to the planning process
Transparency triggers better tactical and strategic discussions;
Using cost management the correct way reveals products or clients that are bearing relatively more cost. Based on this information products and processes can be improved instead of talking about an incorrect allocation. To make sure that the discussions are relevant it should be possible to compare the profitability management with a glass of water. If it is clear people will not question if it is safe to drink. Even if the pollution is hardly visible, people will question the content. So be aware, only ‘crystal clear’ cost allocation will work!