“No-touch planning” - Patrick Tullemans

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No-touch planning? Patrick Tullemans 21 November 2019


Challenges in forecasting >Visibility beyond fiscal year >Forecast accuracy >In-depth data driven planning >Self-service, real-time analytics >Transforming for new technologies • Machine Learning • Artificial Intelligence • Predictive Analytics


AI and ML enable smarter decisions Information

Data

Knowledge

Algorithms, statistical models, cloud platforms, EPM tools

Actions

Decisions

Insight


No-touch planning?


Digital transformation in planning Roadmap

Demand – Supply - Inventory S&OP - IBP

End-to-end process for decision making

Financial Planning

Excellent data

Application enabled

Data analytics

Organisational readiness

Decision focused culture

Freek Aertsen, Academic Director Tias School for Business and Society, 2019


Digital transformation in planning Roadmap

Demand – Supply - Inventory S&OP - IBP

End-to-end process for decision making

Financial Planning

Excellent data

Application enabled

Data analytics

Organisational readiness

Decision focused culture

Freek Aertsen, Academic Director Tias School for Business and Society, 2019


IBP addresses 3 questions What will we sell?

Will we make money?

Can we supply it?

▪ Regular e.g. monthly planning cycle ▪ Managing the business towards strategic targets ▪ IBP is the next level of maturity of Sales & Operations Planning (S&OP)


IBP is integrated with financial planning Annual planning

Monthly IBP

Monthly, quarterly

Marketing

Strategy Product planning

Executive Review

Sales

Budget Supply Chain

Business Reporting & Analysis

Close & Consolidate

Financial Forecast


Impact on FP&A Process

• • •

Monthly constrained S&OP plan as basis for financial forecast Rolling planning horizon 12-24 montjs Strategy drives annual targets

Systems

• •

One integrated cloud based platform Steer on financial and operational KPIs

Behavior

• • •

Act as business partner Secretary to IBP meetings Enforce discipline and meeting adherence


Digital transformation in planning Roadmap

Demand – Supply - Inventory S&OP - IBP

End-to-end process for decision making

Financial Planning

Organisational readiness

Excellent data Application enabled

Decision focused culture

Data analytics

Freek Aertsen, Academic Director Tias School for Business and Society, 2019


Forecasting methods

Non-Causal

Causal

Objective

Time Series Models

Regression Economic Models

Subjective

Judgmental Intuition

Expert Opinion


Time series models > Historical data patterns to forecast the future > Main focus of models is on • Level (average per periode) • Trend • Seasonal pattern > Moving Average (trend, seasonality) > Single Exponential Smoothing (volatile, no trend, no seasonality) > Double Exponential Smoothing (trend, no seasonality)


Statistical Forecasting Minimize “cognitive bias�

Comparison against other (manual) forecast methods Automates forecasts very fast that once required substantial time and human effort Allows for discussion on assumptions


Statistical Forecasting - footnotes The forecast is always wrong

The achievable accuracy depends on the magnitude of the noise component. Requires data of sufficient quality


Digital transformation in planning Roadmap

Demand – Supply - Inventory S&OP - IBP

End-to-end process for decision making

Financial Planning

Excellent data

Application enabled

Data analytics Organisational readiness

Decision focused culture

Freek Aertsen, Academic Director Tias School for Business and Society, 2019


Organizational readiness > Attract and retain staff > Organize the analytics department > Educate the remaining staff > New roles: trainers, explainers and sustainers > New functions: data ninjas, data stewards


Decision making with AI and Human Judgment Other info (non-digital)

Data

AI

Human judgment

(Stat.) Baseline

Review

“Machine”

“Controller”

Business decisions

Actions

Submit “Business”


Business partner in forecast review Key performance questions (KPQs)

Attune data and analytics with KPQs

1. Did we do what we said?

2. Are our plans realistic?

3. Are our plans enough?

4. If we have a gap what are the corrective actions?

https://www.finext.nl/5-must-ask-vragen-planproces/


No-touch planning! Patrick Tullemans 21 November 2019