Moving towards Rolling Forecasts in a Complex Market
Date: 11/03/2021

Helping Big Business

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:

• International Freight and Logistic costs
• Long Range Weather Forecasts
• International Exchange Rates
• Price Chatter on Social Media and in the News
• Export Statistics from soybean meal producing countries
• Global Covid-19 Infection statistics

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:

- Best date to order raw material
- Best price from which supplier
- Best time to ship
- How to best manage storage and freight costs for the extra orders of soybean meal.

Rolling Forecasts - Key Takeaways

- Integrated. Rolling Forecasts has been proven and tested through time. It provides cross- functional alignment of financial objectives across line-of-businesses enabling modeling and analysis of data at greater speed, agility and foresight.
- Accurate. Improved forecast accuracy with the use of scenario and/or driver-based scenarios, doing away with sandbagging and best guess scenarios.
- Moving Beyond Budgeting. Reduce reporting time from months to minutes, saving time and money, and improving accuracy and reducing decision-making time.
- Efficient. Gain insight into future activity instead of reviewing costs retrospectively; make faster data-driven decisions; reduce risk and mitigate the drivers of change rather than just reacting to the change.
- Adaptive and Enterprise-scales data capacity. In this volatile and complex market, staying in tune with the current demands and trends and taking immediate and relevant actions, are what every organisation needs.

IBM Virtualisation Services, Cloud Pak for Data and Planning Analytics on TM1 can greatly increase your
competitiveness and market position in a volatile market. Learn more by downloading Cornerstone’s whitepaper “[whitepaper name]” today.

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