Business interruption is a fact of life, but it does not mean disaster. By following a structured business planning process that is integrated across the organization, companies can put in place robust, technology-backed processes that enable them to anticipate and mitigate the impacts of disruptive events, writes Mike Snape, associate of Oliver Wight.
Serious events with widespread and often global consequences, known as “black swan” events, can take companies by surprise. Natural disasters, financial crises, the introduction of new legislation, technology and supply chain disruptions or health emergencies such as Covid-19 can have far-reaching impacts for organizations across all industries.
If there’s one thing the Covid-19 “black swan” has taught leaders of organizations of all sizes, it’s that business agility is the key to resilience and growth.
The ability to adapt efficiently, cost-effectively and quickly, and the ability to meet changing customer expectations, have become mantras for success and future viability.
Integrated business planning
By running a integrated business planning (IBP), organizations can gain agility to process data quickly and make smart, informed decisions. This way, they can act quickly to adapt and disrupt changing markets.
Successful adoption of integrated business planning requires three key elements:
Centralized, standardized and integrated processes across all business units and functions enable streamlined workflows and help employees work more efficiently and collaboratively. Meanwhile, having a unified, process-driven approach helps improve visibility into operations, so planners can quickly access the information needed to support data-driven decision-making.
Advanced business software supports digitized and automated processes that allow employees to perform daily tasks efficiently. Additionally, by establishing a single source of truth across the organization, companies can generate enterprise-wide reports in real time.
The good behavior
Comprehensive and integrated processes guide employee behavior so that they work as efficiently as possible in accordance with the key requirements of each job, while enabling tracking, monitoring and reporting on key KPIs.
However, if processes are disjointed and unreliable, people invent their own ways of working with silo-centric KPIs and definitions of success. This behavior leads to a proliferation of spreadsheet-based management systems, creating data silos that can complicate reporting.
Collect the rewards
Integrated business planning supports a wide range of features that enable organizations to become more efficient at proactively detecting and adapting to changing markets. This way they can:
Look further into the future
Scenario modeling allows planners to explore options in the event of potential disruptions, such as a delay in the delivery of a raw material or what would happen if the VAT changes in a particular market. By running a wide range of scenarios across the organization, companies can anticipate the impacts on their ability to meet demand and the load on the supply chain, as well as the financial consequences.
Then, businesses can identify specific vulnerabilities or emerging opportunities and make appropriate decisions to prepare for them.
Additionally, extending the planning horizon beyond next year is also essential if companies are to proactively monitor and react to changing markets. A planning horizon of at least 36 months allows companies to constantly align with changing market demands and detect new trends that may affect specific product development requirements or peaks in demand.
Spend time analyzing, not collecting data
Unified data management eliminates the need to manually compile reports from multiple sources. Additionally, with robust processes backed by advanced technological capabilities in place, employees have time to run scenarios and perform analysis rather than collecting and collating data.
Intelligent AI and machine learning analytics help ensure easy access to meaningful information, meaning planners can focus on making business-critical decisions.
Make data-driven decisions based on the latest insights
Too often, strategy is determined by intuition rather than thorough market analysis. When decision-making is based on data, annual budgeting practices can mean that the information is outdated.
By moving to rolling financial forecasts, companies can ensure that decisions are made based on the latest data-driven forecasts. This way, planners don’t just make decisions based on historical data, but rather move forward using the latest information on market trends and opportunities. Meanwhile, the constant reassessment of market conditions allows companies to quickly pivot and change direction if circumstances change.