We’ve talked a lot about the direct benefits of moving away from reliance on spreadsheets but the positive impact has a multi-layered knock-on effect far wider than just the finance team.
Using IBM® Planning Analytics to improve efficiency, speed and flexibility within your organisation has manifold positive outcomes.
Planning and budgeting with precision
Consider a manufacturing supply chain that sources materials from multiple regions, carries out production in additional areas and then distributes for sale across numerous territories. The complexity of the variables at play within each element of the process inevitably leads to assumptions being made and averages being used in order to make planning and analysis more manageable within a spreadsheet system.
Data relating to foreign exchange rates, delivery times, actual payment timelines, commodity costs, unit costs of manufacture, unit shipping costs, storage costs across territories and sale price by SKU will all be based on simplifications to facilitate modelling within a system containing one billion pain points. Applying a change to a single element within the model – for instance the foreign exchange rate – will only be feasible at the top level and will be time consuming and almost impossible to carry out alongside changes in other variables. Variables with complex inter-relationships such as price elasticity will be virtually impossible to adjust.
However, Planning Analytics allows for complex modelling with ease. This dynamic system can handle your raw data without the need for simplifications and gives your business real-time access to valuable scenario planning and accurate insights to drive profitable decision making.
The ability to interrogate your data at a granular level and model changes in minutes opens up a world of possibility. Our retail customers like Edrington are now capable of creating P&Ls at product level which look at individual retailers and territories if necessary.
Increased understanding of value of product elements
Being able to analyse your product in such detail powers an increase in product quality and therefore profitability. Having a better understanding of which product elements create most value – in both the long and short term through stock flow analysis – leads to reviews of manufacturing best practice, development process and testing methods.
Having access to the insights this analysis generates enables you to ensure you have the right products in the appropriate markets through the best distribution channels. The follow-on impact of this is a reduction in holding of contingency stock which in the long term will reduce the need for discounting to rebalance your product levels.
Improved resource allocation
Having access to the whole story when it comes to the position of your business leads to much better decision making in every direction. When you are in possession of all of the information you can direct management focus to the appropriate areas and be more flexible with your plans; changes can be implemented based on performance and opportunity, simultaneously reducing risk and seizing new opportunities. This proactive management of projects is enhanced through improved understanding of advanced indicators – once you have the awareness to recognise early warnings, you can respond accordingly.
Proactive involvement of key stakeholders
The ability to proactively involve key stakeholders along the journey promotes a much more creative approach for your business. Bringing the finance team out of their silo and having them engage in ‘what-if’ conversations with vital business units encourages conversations to happen early in the process, driving profitable changes from a constant interrogation of performance and available opportunities.
There is undoubtedly a huge direct benefit to your finance team if you take steps to alleviate the pain of a spreadsheet-based system but we hope we have illustrated how much wider the benefits can reach within your business. To hear more about the ways in which Planning Analytics can bring increased capabilities to your company, get in touch with us today.
Simon Bradshaw
I have worked in finance and business systems development since 2001 and am an associate member of the Chartered Institute of Management Accountants. In 2016 I became a founding member of Spitfire Analytics, a consultancy specialising in IBM Planning Analytics. We are committed to building long-term relationships across all industries. I focus on my CPD through CIMA and IBM badges, ensuring I am always abreast of best practice and developments within the industry.
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