RT4: Supply chain strategy and financial metrics
- hosted by Bram Desmet, Solventure
  • Aligning financial forecasting and operational forecasting:

    • We all have the ambition to come through 1 set of numbers in S&OP or IBP

    • An issue is there are different needs/requirements:

      • Best estimate: what is the most realistic estimate of what we are going to sell, this is what we want to put in the operational plan

      • Ambition: what is the target? Often the budget. The stretch between the best estimate and the budget triggers plans on how to close the gap and how to stretch the organization to its limits.

      • Commitment: what do we commit to financial markets, to shareholders and analysts, or to HQ?​

    • Tips & tricks are to

      • Link incentives for sales people to the ‘S&OP forecast’ instead of the ‘commitment/financial forecast’

      • Try to ensure the ‘S&OP forecast’ is what is ‘leading’, whereas the ‘financial forecast’ is only ‘an adaptation done afterwards by finance’

      • Display gaps between the ‘S&OP forecast’ and the budget. Detail plans on how to close the gap.

  • Creating buy-in from sales to forecasting and slow/non-moving inventories

    • Many of us struggle with getting the buy-in from sales on ‘how to improve forecast’ and ‘how to create accountability for slow or non-moving inventories’

    • Tips & tricks are to

      • Include forecast accuracy metrics in the incentives of sales

      • Show slow or non-moving inventories in the P&L of sales, include a ‘cost’ of slow/non-moving inventories. This will create a trigger to ‘avoid’ slow moving stock and to ‘help to get rid’ of it.

      • Use forecast accuracy to decide on ‘who will get how much product’ in case of shortages

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