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Workforce Planning

One of the most significant changes to businesses during COVID-19 has been  the large-scale work-from-home policies that almost all companies implemented. While some businesses may have partially or fully practiced this for a few years already, it has never in the history of the world been at this level. 

As many business owners are eager to get their staff back in the office, they may find that a majority of their team members have enjoyed their newfound freedom of working from home with zero commute time and no travel costs.

Some companies have already announced that they will be completely work-from-home going forward. Some employees may switch companies to find a more flexible employer if pressure to show up in the office five days a week is too high. 

Chances are that the remote work trend that was accelerated by COVID-19 will not fade away. There will be other trends that will continue to shape work-from-home habits such as:

  • Virtual reality technology
  • Video and collaboration technology (Teams, Slack, Zoom, etc.)
  • Longer commute times due to re-emerging traffic congestion
  • Hassle of all the new ‚Äúcleanliness rules‚ÄĚ when coming into the office
  • Real estate prices driving workers to live further away from work¬†¬†
  • Commercial real estate prices and parking rates
  • Security concerns as home internet often is less secure than being in office¬†

If work-from-home is becoming the new normal for many organizations, a number of new questions arise including: 

  • How do companies assure that their team members are as- or more efficient as they were when working at the office?¬†
  • How do managers operate when they rarely ever meet their team members other than virtually on video calls?

Let’s take a closer look at both of these important items.

Efficient Workforce Planning Strategies and KPIs

Increasingly, executives are doubling down on two-way transparency. In other ways, the sharing of how you are doing as a company and how each team member is performing against agreed upon goals. In order for this to work, employ performance-based compensation plans and processes. 

Next, tools must be implemented to track metrics and provide reports. Imagine dashboards and scorecards with personal KPIs  and traffic lights. This is the recommended approach according to many management gurus.  Use top down sharing of strategies and goals that support the KPIs, broken down from company to department to individuals. Then, as results come in, bottom-up sharing of how team members as well as departments performed versus goals. 

Specifically, with likely strong growth in work-from-home trends, executives are already pondering how to ensure that employees are engaged, efficient and goal driven as they conduct their work from their bedroom or living room. With limited oversight and old-school micromanagement quickly fading, personal KPIs for work are rapidly growing in popularity. However, setting the best possible goals for employee KPIs can be a bit of science in itself.

Often attributed to the management guru, Peter Drucker, and first used by George T. Doran in 1981, the acronym, SMART, is used to guide goal setting.  Here is an overview of SMART goals: 

  • Specific – simple, sensible, significant
  • Measurable – meaningful, motivating
  • Achievable – agreed, attainable
  • Relevant – reasonable, realistic and resourced, results-based

In the years ahead, organizations both in public and private sector, will increasingly explore and try out individual KPIs, and those that are most successful with it are better equipped to build thriving organizations that are ‚Äúfuture proof‚ÄĚ.¬†

Key Elements of Remote Workforce Planning 

Managing and growing employees successfully has always been an area that can put a company ahead of its competitors. Companies spend money on benefits, training, education, and compensation plans to improve their staff. However, organizations promote from within, without experience, and do not train the new managers. This was a failing process and the future will require better managers with a higher percentage of employees working from home.

Define Job Descriptions 

The starting point is the most important. For each position, a manager needs a job description with the six to eight main responsibilities of the role along with the KPIs that will be set each year. Define what makes a successful candidate and a candidate that would fail in the role. Each employee receives this document from the manager and then the manager reviews it in a meeting to ensure both understand the expectations.

There are many ways of coming up with the main roles and responsibilities of the position. Interview people currently in the role, research online, talk to the HR department, and discuss with other managers. Keep the list of responsibilities concise, but include details. The more details around each role will enable the employee to understand the role and improve their chances of success.

Pinpoint the KPIs that will Define the Role.

The manager should explain how he/she will measure each KPI in the role and what is a success or a failure. Describe where the data comes from and how the KPI is calculated. Then sit with the employee and document what the goals for each KPI by a specific period will be. Ensure that the employee is onboard and agrees that they can achieve their goals. If numbers are set that they do not believe in, then you may lose the employee early on in the process.

Review and Finalize the KPIs 

Historically, managers would have an annual review that tried to encapsulate what happened over the year, but typically only highlighted the last few months as that is all that most remember. In a year like 2020, it becomes even more difficult with the rapid shift to remote work. 

Start now ‚Äď meet with the employee monthly, show the KPI goal, the results to date, and a variance. Include a traffic light on each KPI to show whether the employee is succeeding (green), failing (red), or in the middle (yellow). For all yellow and red items document action items that the employee needs to do to improve upon those that are below the goal.¬†

Now, when you meet, the manager simply reviews the numbers and the prior action items. Many of the work from home efficiency concerns go away and it is all about productivity.  Below is an example of a simple scorecard for a manager to review with a consultant that includes actual data, the goal, variance with traffic lights, and goals for the next four quarters.

Screen Shot 2020-06-03 at 1.03.39 PM

By doing this across the board, the culture changes to become a highly productive workforce. Good employees want to work with other good employees. This culture helps build a profitable company with high growth. Terminate the employees that regularly do not meet their goals, but in a way that is clear from day one. 

 

Benefits of Automated Workforce Planning Software and KPI Management

Whether your KPIs and workforce planning requirements are simple enough to be handled in Excel or currently using a modern planning and budgeting tool, now may be a good time to think about ways to combine budgeting, workforce planning, reporting and KPI management into a single solution. 

So, whether caused by an unfortunate virus outbreak or technology trends affecting your industry, having effective workforce planning tools and plans to be ready for a reforecast is always going to reduce stress and blood pressure for the organization’s management team. 

Example of an automated statistical forecast

At the core of every business strategy for products and services is to provide optimal management of the supply chain. A leak or inefficiency in the supply chain eats away at the organization’s bottom line. Supply chains are becoming more complex with more variations in products, distribution channels, and material planning. Accurate supply and demand planning are essential for optimal productivity and profitability.¬†

How does a business obtain an optimal supply chain? It comes down to how well an organization can develop a demand plan. Demand is never linear and rarely easy to predict. A planning team needs to have the right historical data that can be used to create a statistical forecast, achieve consensus from the stakeholders, and be quick to pivot on changing internal or external market trends. In this article, we seek to define and discuss the elements of demand planning, analyze the cost of failure, and outline the steps to success.

What is Demand Planning?

Demand planning is a multi-step process to forecast demand, improve accuracy of forecasts, and align inventory with peaks and troughs of demand. In other words, demand planning is the process of forecasting demand for a product or service. 

Successful demand planning is defined by having the right balance of inventory levels to meet customer needs while minimizing inventory surplus or deficiency. 

Here are the four crucial aspects of demand planning in order of importance: 

  • Product Portfolio Management – Product portfolio management oversees the entire product lifecycle. It starts with the introduction of a new product to the eventual end of its product life cycle. Upkeep and maintenance of product data is key to statistical forecasting.
  • Statistical Forecasting ‚Äď Build a forecast with past inventory data, sales data, and appropriate product history to predict future data or trends.
  • Trends (Internal and External) ‚Äď Build into your forecast an estimate of casual influences from internal and external trends. Internal trends include seasonality of your products and hiring talent to scale. External trends include unexpected economic crisis, competition, socio-cultural, legal, and political forces.¬†
  • Events and Promotions ‚Äď Once a forecast is generated with the above factors in mind, events and promos can be used to help hit your S&OP targets.

The aspects of demand planning go beyond the statistical components of a demand forecast. Demand planning leverages accurate demand forecasts to create action plans for the organization while being privy to internal and external factors that affect supply at all steps of the chain and consumer demand. 

Implementation of demand planning is using analytics of product data and trade promotions to hit sales and inventory targets. Organizations must be quick to pivot and adapt to changing market conditions even after starting a demand plan. 

Demand planning is an ongoing effort to ensure peak profitability management. 

Importance of Automated Demand Planning

Failure to adopt an automated statistical forecasting and demand planning approach can lead to a wide range of issues such as missed deadlines, unhappy customers, Inventory surplus or deficiency or delayed response to market dynamics. 

Delayed response means your business can lose a competitive edge or fall behind competitors. Inability to act quickly on supply chain disruptions has material impact on both top-line and bottom-line numbers and you can end up losing market share to competitors. Below is a list of some of the business impacts of not utilizing automated planning strategies: 

Lost credibility

Losing credibility means lost business. Inability to fulfill customer orders due to bad inventory planning will lead to permanent damage to trust that customers have with your company. This will impact future orders and leave your brand with a significant damage to reputation. 

Wasted Resources

Overestimating customer demand for products leads to significant waste in time, money, and personnel. If turning over inventory fast enough becomes difficult, your business’s cash flow will be impacted. Having high levels of excess or obsolete inventory can lead to significant financial losses. 

To mitigate high costs of failure, businesses now more than ever need to trust the numbers and adopt a sophisticated demand planning strategy that leverages data and market insights. Adopting automated demand planning strategies will lead to actionable forecasts.

Aspects of Demand Planning

Understanding the work required within each element of demand planning will allow you to create the most accurate, up-to-date forecasts that will better inform your Sales and Operations Planning (S&OP).  

1. Product Portfolio Management 

Many times, past sales performance can be used to forecast future sales performance. It is important to regularly upkeep and cleanse product data. Relevant data might include inventory, stockouts as they occur, seasonality, sales, and consumer demand through peaks and troughs. The difficulty here usually is the number of systems keeping these data sets as isolated transactions. 

 

2. Statistical forecast 

Forecasts need a reference point, historical data in sales, inventory, and demand. Basically, what was actualized in the past can be a good indication of future sales. But not all data is useful, old data is typically not as useful as more current data as it might not correlate with future demand. The same bad situation happens when you do not use enough data to create a forecast. The right amount is typically trailing 24 months of most recent data. 

 

 

Example of an automated statistical forecast

Example of an Automated Statistical Forecast

 

Example of demand planning of weekly sales by item

Example of Demand Planning of Weekly Sales by Item

3. Internal Trends 

Internal trends relate to staffing issues at a level in the supply chain, seasonal demand due to product type, frozen capital, slow turnover, stockouts and general unpredictable sales volatility. Internal trends affect even the best steered businesses which makes it imperative to factor these causal influences into the forecast.  

 

4. External trends

External trends are another form of causal influence, but less predictable and usually harder to build into the demand planning forecast. External trends usually force a business to reforecast whereas internal trends are less likely to lead to a new forecast. Businesses that do reforecast and act on changing external trends like an economic recession or changing political climate are best positioned to succeed.  

 

COVID-19 has disrupted the majority of supply chains around the world in unprecedented scale. Amazon is probably one of the most recognizable organizations that has put tremendous effort in shifting their supply chain to prioritize shipping of essential items.

 

In light of COVID19, Amazon quickly refocused shipping priorities and product fulfillment to consumer essential goods. They have been quick to scale, pulling personnel and distribution resources from nonessential consumer goods and hiring 175k new workers in two months. 

 

Demand planners must be quick to identify factors that can impact demand such as natural disasters, news events, internal and external unanticipated issues. To do so, an organization needs to be armed with a central repository of all their information to generate an accurate forecast and adapt to changing market conditions to meet customer demand. 

 

5. Events and promotions

A time bound product promotion might lead to more sales in that time interval at a lesser margin. Holidays like Black Friday and Christmas can generate more sales in those few days than a whole month. 

Once a forecast is set, there needs to be a consensus on the actionable plan that comes out of the forecast. Part of this actionable plan is using events and promotions to hit sales and inventory targets. You want the right balance of inventory turnover, sales, while reducing COGS, and reducing waste in resources. Promos and external sales initiatives can help you get there. 

The Future of Demand Planning

Demand planning is becoming increasingly digital with advances in technology and machine learning. Demand planning software is being developed to better position businesses to adapt and update forecasts real time. Increasing number of businesses are now using CPM tools integrated with their ERP system to create multi version forecasts that are constantly updated and refined to estimate future sales. 

A successful demand planning action will lead to countless benefits including: 

  • Lower inventory costs
  • Decrease in stockouts
  • Waste reduction (obsolete inventory)
  • Increase in on-time, in full deliveries
  • Decrease in expedited shipping costs
  • Better pricing negotiation with suppliers

Contact Solver to Learn More about Demand Planning Software

Solver offers a flexible planning solution where powerful input forms are designed in Excel and deployed in the cloud. Solver can fit any business needs from a manufacturing company trying to forecast sales by month to a  retail business looking to forecast SKU based on historical data. 

Solver’s cloud  CPM solution is fully customizable to fit your demand planning needs. Contact our team today or request a demo for more information about our corporate performance management tool.

financial planning

Precise financial planning is an integral part of every business’s success. It also takes a substantial amount of time and energy from the business’s financial department, especially if the business is dealing with a volatile market. To meet the need for accurate and consistent budgeting, forecasting and financial analysis, large companies have formed specific financial planning and analysis (FP&A) branches within their organizations to help them plan for the future.

FP&A professionals help companies tighten their financial processes and make more informed decisions regarding business operations and financial goals. Keep reading to learn more about the FP&A process and its benefits ‚ÄĒ and how Solver can help streamline this process for companies across industries.

What Is FP&A? Overview: The FP&A Process

FP&A can be thought of as a process involving three basic steps:¬†budgeting, forecasting and analyzing¬†a company’s financial reports.

Within a company’s finance department, FP&A professionals provide financial reports as well as insight into that company’s financial decision-making processes. In general, FP&A professionals work closely with a company’s leadership to provide data-driven support in major financial decisions.

Unlike accountants and financial analysts, FP&A professionals analyze financial data, identify patterns and trends in their companies’ financial processes and recommend strategies to improve their companies’ financial and operational success. The role of an FP&A is multifaceted, but the purpose of this position ultimately lies within helping companies make better financial decisions.

The general FP&A process contains these basic steps:

  • Analyzing the organization’s current financial situation
  • Defining financial goals based on this data
  • Considering variables and identifying different courses of action
  • Creating a financial action plan with potential alternatives in mind
  • Revising and re-evaluating the action plan with an organization’s leadership as needed

Precise FP&A steps can vary depending on the size of an organization, its industry and any enterprise resource planning (ERP) or other software it has in place. However, the general budgeting, forecasting and analysis steps remain the same across FP&A roles.

Advice From Professionals: Improving Your FP&A Process

The FP&A process can get complex as an organization grows and takes on more financial responsibility. Oftentimes,¬†an unpredictable economy¬†can force an organization’s financial department to get creative when it comes to planning and resource management. This is when FP&A professionals are needed more than ever.

To make the most of your FP&A process flow, take a look at the following FP&A expert tips:

Define the Financial Planning and Analysis Process for Your Company

Every company is unique. As a result, every FP&A process is going to vary slightly from the next. In order to get the most out of your FP&A process, you need to determine what FP&A means for your organization.

To most companies, FP&A refers to the sum of all annual budgeting and monthly financial reporting processes. However, FP&A can also include quarterly re-forecasting, weekly sales reporting and other financial operations.

Determine what your FP&A processes need to look like in order to meet your organization’s short-term and long-term financial goals. Remember that your FP&A process needs to handle both financial and non-financial data from every level of your organization.

Designate a Specific FP&A Department Within Your Company

While handling FP&A processes comes with the territory of finance departments in general, FP&A has emerged as a rather specialized job.

It’s best to have a sector of your finance department dedicated specifically to FP&A processes, where you can benefit from the financial insights of experts who not only know your company but are also experienced in¬†evaluating your company’s financial data holistically¬†and with a vision for future growth.

Having a sector of your finance department dedicated to analyzing how your business is spending money and generating revenue will put your business on track to reach its financial goals.

Get the Full Story Behind Your Numbers

The ultimate goal of FP&A is to help you understand the “why” behind the numbers on your financial reports. FP&A professionals not only gather the company’s financial and operational data, but they also analyze it to determine patterns and correlations between the data and their organization’s financial practices. This helps business leaders spot problematic trends and develop a plan of action to improve their organization’s financial practices.

FP&A professionals help organizations learn from past data so they can improve upon their financial habits and processes. FP&A helps stakeholders understand why the numbers are what they are¬†‚ÄĒ and how to achieve better outcomes.

Prioritize Learning

FP&A processes will inevitably highlight opportunities for organizational improvement. When such areas are identified, companies should harness these moments and learn from them. Not every financial decision is perfect, but when an organization can acknowledge where it may be lacking and immediately get to work on finding solutions, it sets itself up for long-term success.

To make the most of FP&A processes, company leaders must embrace the financial data as they see it and prioritize learning from the insights of the FP&A professionals on their team.

Stay Future-Focused

Overall, the FP&A process is a future-focused endeavor. With so many variables such as the market, supply chains, changing internal operations and much more, company leaders can easily get lost in the details of present-day data.

However, good FP&A practices turn the company’s focus toward future growth with cutting-edge budgeting and forecasting models that take a holistic approach to the company’s growth trajectory.

Implement FP&A Software to Improve Processes

One of the best things you can do for your company’s FP&A processes is to implement the right¬†corporate performance management (CPM) software¬†for your FP&A budgeting process needs. At Solver, we offer innovative CPM solutions that can be tailored to the budgeting, forecasting and reporting processes of your company.

With Solver CPM software, you can keep all of your financial data in one place and put together comprehensive reports, perform advanced analyses and more.

Contact Solver to Optimize Your FP&A Processes Today

With CPM software from Solver, financial reporting and analysis has never been easier. Contact us to speak with an expert on how you can optimize your FP&A process flow with our globally popular software solutions. Submit an inquiry or request a product demo today!

 

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