Moving towards Rolling Forecasts in a Complex Market
While originally thought best used to establish small-business ROI, Rolling Forecasts have been proving extremely beneficial to large organisations in today’s unpredictable market.
Smart companies are now finding that Rolling Forecasts are giving them the flexibility and agility to manage sudden changes in the marketplace, without the usual time-consuming delays in updating source data, collaborating on multiple inputs and consolidating the result with rich analytical reports.
Increasing Accuracy and Agility
In today’s volatile and complex market, where uncertainty has become the new norm, Rolling Forecast can provide large organisations with proven and effective benefits such as:
1) Scenario and Driver-Based Analysis
2) Time and Cost Effectiveness
3) Risk Mitigation and Reduction
4) Increased Accuracy
A Common Example
Let’s look into the case of a market leading pet food company in Australia, which we will refer to as “Bark”. An industry leader in the Australian marketplace, Bark has been a manufacturer of pet food products for over 25 years. Their main product is dry dog food, which relies on soybean meal as one of its raw materials. The price of soybean meal has been unstable over the past 10 years due to unusual weather patterns, with costs averaging from $0.15 to $0.30 per ton depending on scarcity.
Over the past year, Bark had been requesting its analysts to provide regular updates on soybean meal prices, including current data from their trusted soybean meal suppliers and information on other external factors including:
The daily variations in logistics and freight costs have been affecting the supply chain since the global pandemic started in March 2020. The flow of local and imported produce almost trickled to a complete stop when international borders closed suddenly due to the pandemic. As with many others, Bark’s operations were greatly affected by the limited availability of raw materials, and the slowing of its domestic supply line, hurting both the company’s revenue flow and bottom line.
Both the COVID-19 pandemic, and the ongoing drought in South America created scarcity in the marketplace. Without soybean meal, Bark could not manufacture dry dog food. To help mitigate these problems, Bark’s analysts produced a rigorous Rolling Forecast that would tell them where and when to buy and ship extra units of soybean meal to ensure ongoing supply.
Bark’s analytics team decided to use advanced analytics in IBM Watson Catalog and Planning Analytics on Cloud Pak for Data. By virtualising their structured and unstructured data sources, they minimised the impact on production of their real-time analysis and planning activities and created an effective buying schedule based on their most up to date information, that was both effective and easy to following, including:
Rolling Forecasts – Key Takeaways
IBM Virtualisation Services, Cloud Pak for Data and Planning Analytics on TM1 can greatly increase your
competitiveness and market position in a volatile market.
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