Demand and supply analysis to simulate the impact of volatility and support risk-optimized planning of finance, sales, marketing and supply chain.

1. Integrated Business Planning
Demand and supply analysis to simulate the impact of volatility and support
risk-optimized planning of finance, sales, marketing and supply chain
Gianni Giacomelli
Senior Vice President, Genpact
Gaurav Agrawal
Assistant Vice President, Genpact

2. A Global Business Process Services Leader: Process
Transformation and Outsourcing, Analytics, Technology
What
we do
How
we do it
Our
impact
We help leaders of some
of the largest enterprises
transform and run
their processes and
operations, including
the very complex and
industry-specific
Unbiased, agile combination
of process science, related
technology and analytics limits
upfront costs and enhances
future adaptability
We help enterprises to be
more competitive by
becoming more
intelligent:
adaptive, innovative, globall
y effective and
connected…
Right critical mass:
•
we are large (64,000+ global
staff) but our solutions
appropriately flexible
•
our top management is
directly involved in our client
partnerships
…by enabling tighter
management of
costs, risks, regulations,
and supporting growth
The results: US$22B* of impact for 800+ global clients
PROCESS • ANALYTICS • TECHNOLOGY
© 2014 Copyright Genpact. All Rights Reserved.
2

3. THE CHALLENGE
PROCESS • ANALYTICS • TECHNOLOGY
© 2014 Copyright Genpact. All Rights Reserved.
3

4. Complexity, volatility, and lack of value-based integrated
business planning (IBP) squeeze margins
Increasing complexity of
products and of the global supply
chains
Vertical integration;
business/product line restructuring
due to merger and acquisitions
Missed market opportunities due
to the lack of capabilities to assess
opportunities
Cumbersome tools; poor visibility
of data and poor end-to-end
synchronization of SC across
different planning levels
Value based planning is not
integrated into the S&OP process
Rising raw material costs and
regulatory issues
Poor demand planning; increasing
volatility of demand while customers
require agile response and better
service
Shorter product lifecycles require
faster introduction of the new
products
Gaps in people‟s capabilities
prevent companies to capitalize on
their investments
Business responsiveness becomes paramount in this customer-focused culture
PROCESS • ANALYTICS • TECHNOLOGY
© 2014 Copyright Genpact. All Rights Reserved.
4

5. Challenges for effective IBP process fundamentally lie in the
way organizations have been operating
Divergent functional
agendas
• Different objective legitimate functional goals for sales and
marketing, supply-chain, and finance
• Teams chasing „optimal KPIs at functional level‟
• Behavioral pressures aggravate divergent behaviors
Mis-aligned incentives
Silo-based planning
processes
Inadequate data and
systems
Non-transparent
financial reporting
PROCESS • ANALYTICS • TECHNOLOGY
• E.g. sales provides conservative sales and promotional uplift
forecast, over-target performance is rewarded regardless of
incremental costs and difficulties in supply-chain
• Functional planning exists almost as a discrete activity;
integration, if any, is only an afterthought
• More iterations in forecasts; almost guaranteed sub-optimal
outcome at overall level
• Lack of data readiness increases workload significantly
• Extended time to iterate and coordinate different perspectives
makes S&OP less agile; quality of analysis likely to be
compromised due to time pressures
Geographical complexities, intra-company trading, FOREX
adjustments etc. often obfuscate relative performance
measurement, impairing effective IBP
© 2014 Copyright Genpact. All Rights Reserved.
5

6. Limits of traditional mid-range planning in the “new normal”
Typical process
• Lean cross-functional teams
• ERP systems of records with no
detailed scenario planning
capabilities
• Standard cost (product accounting) in
ERP from past data only
• Aggregate (S&OP) and ad-hoc
forecast input from sourcing and other
cost owners (e.g. logistics), in excel
• Reallocation of marketing resources
happens nationally
PROCESS • ANALYTICS • TECHNOLOGY
Implications in the “new normal”
• Imprecise forecasts for brand P&L and
category roll-ups for next 6-9 months
• Future cost volatility isn‟t fully used to
optimize product P&L by neither Sales &
Marketing nor Finance
• Potentially suboptimal marketing mix
optimization and spend
allocation, and optimization sought only
at local – not regional – level
• Re-pricing analysis not granular
enough - marketing asked to “raise
price” across the board
© 2014 Copyright Genpact. All Rights Reserved.
6

7. THE SOLUTIONS
PROCESS • ANALYTICS • TECHNOLOGY
© 2014 Copyright Genpact. All Rights Reserved.
7

8. IBP integrates planning activities and scenario modeling for
profitability into the end-to-end decision-making process
Areas for industrialized support for IBP process
A
Demand analytics and planning
Demand
Analytics
Support
• Product/Geo/
Channel
Mix change
scenarios
• Demand and
inventory forecast/
scenarios
• Price/ promo
scenarios
Business Planning
• Sales revenue goals
• Margin/profit goals
• Geographic strategy
• Brand/channel position and pricing
• Brand/channel events/promotions
calendar
Category Planning
• Product mix/placement/pricing
• Product lifecycle plan
• Product sales forecasts
• Statistical demand forecast
• Historical demand
Supply analytics and planning
Supply
Analytics
Support
Operations Planning
• Supply Chain
finance
Supply Planning
• Order fulfillment
• Merchandising
• Sourcing
analytics
• Supply forecast
• Replenishment plans
• Lead time variability
• Manufacturing throughout
• Logistics
analytics
Distribution Planning
PROCESS • ANALYTICS • TECHNOLOGY
IBP
Process
Support
Conduct
Review performance
and root cause
C
Discuss IBP
optimal scenarios
Probabilistic
Scenario
Modeling
Agree on
demand, supply, m
arketing and
pricing plans
Marketing Planning
Demand Forecasting
B
D
• Inventory development
• Capacity constraints
• Transport costs
• Profitability scenarios
• Pricing scenarios
• Product/channel/ geo
mix scenarios
• Capacity/
manufacturing
scenarios
• Inventory cost
• Root cause of plan to
actuals
• Demand shaping
opportunities
Prepare
Collect and analyze
Scenario results
Conduct
preliminary S&OP
activities
IBP
Develop agenda
& distribute plans
Execute
Modify plan
Communicate plan
Execute plan
Measure performance
and profitability
© 2014 Copyright Genpact. All Rights Reserved.
8

9. A
Demand analytics support
•
Pricing and trade
promotion
scenarios
PROCESS • ANALYTICS • TECHNOLOGY
Tactical competitive moves can be modeled on need
basis depending on data availability
Aggregated and stratified forecast modeling at
product/category/PPG level for fast-moving, slowmoving, non-moving items
•
Advanced algorithms factoring demand
volatility, qualitative market inputs, industry nuances
for improved forecast accuracy
•
Demand and
inventory
forecasting
•
•
Product/Geograph
y/Channel mix
modelling
scenarios
Category, brand, and SKU level revenue scenarios by
geography and/or channels leveraging historical and
projected data on volume, price, promotion, and other
marketing spend sensitivities
Analyses of historical volume, region, price, and
promotional spend and mix data to discover
associations; understanding profitability profile of
demand
•
Scenarios for projected volumes at different levels and
mix of promotion/pricing combination
© 2014 Copyright Genpact. All Rights Reserved.
9

10. B
Supply Chain Analytics
•
•
Sample product development
Supplier performance management
Network optimization*
•
Carrier sourcing analytics*
•
Freight lane analytics*
•
PROCESS • ANALYTICS • TECHNOLOGY
Commercials support
•
Supply Chain
Finance
•
•
Logistics
Supplier selection support
•
Sourcing
Sourcing strategy support
BOM/ Material master management
•
Forecasting, budgeting and standard product costing
•
Factory accounting, period close and reconciliation
•
Reporting and analysis
© 2014 Copyright Genpact. All Rights Reserved.
10

11. C
IBP Probabilistic scenario modeling
•
Profitability scenarios; pricing scenarios;
product/channel/geographic mix scenarios;
capacity/manufacturing/sourcing scenarios; inventory
cost scenarios
•
Root cause analysis for scenario trends
•
Prioritization of „at-risk‟ products/SKUs based on
relative scales of „value at risk‟ and „impact on profit pool‟
and client inputs
•
Refining marketing decisions for prioritized „at-risk‟
product/SKU categories to maximize profits
•
Implications of scenarios at module/functional levels
•
Building hypothesis on „optimal consensus
zones/ranges‟ for key metrics. E.g. what are the ranges
of inventory levels, service-level, manufacturing capacity
utilization, etc. – for maximum profit
Scenario based
category/SKU level
profit projections
Prioritization for “atrisk” products; profit
maximization
decisions
Analytics support to
individual S&OP
module probabilistic
scenarios
PROCESS • ANALYTICS • TECHNOLOGY
© 2014 Copyright Genpact. All Rights Reserved.
11

12. D
Industrialized analytics can provide help to prepare for, conduct, and
execute the IBP process
•
•
Execution and
monitoring of IBP
PROCESS • ANALYTICS • TECHNOLOGY
•
Develop agenda with the IBP owner informed by overall
analyses (e.g. crucial conflicting/diverging metrics), and
distribute plans to functional stakeholders
Performance review and root cause reports
•
Develop overall optimized profit scenarios (at
enterprise level) to facilitate objective discussions
•
Quantitative reports on „implications of overall profit
optimization‟ at module/function level
•
Conducting of IBP
sessions
Analytics support to upstream preliminary S&OP
activities such as demand planning and supply planning
•
Preparing for IBP
sessions
Collect and analyze scenario results
Monitor and report IBP execution progress, variance
reporting to ensure alignment with IBP goals
•
Measure performance and profitability periodically and
publish executive dash-boards; recommendations on
corrective actions, target metric modification
© 2014 Copyright Genpact. All Rights Reserved.
12

13. CONTACT GENPACT TO EXPLORE THE
“ART OF THE POSSIBLE”
PROCESS • ANALYTICS • TECHNOLOGY
© 2014 Copyright Genpact. All Rights Reserved.
13

14. About Genpact
Genpact Limited (NYSE: G) is a global leader in transforming and running business processes and
operations, including those that are complex and industry-specific. Our mission is to help clients become
more competitive by making their enterprises more intelligent through becoming more
adaptive, innovative, globally effective and connected to their own clients.
Genpact stands for Generating Impact – visible in tighter cost management as well as better management of
risk, regulations and growth for hundreds of long-term clients including more than 100 of the Fortune Global
500. Our approach is distinctive – we offer an unbiased, agile combination of smarter processes, crystallized
in our Smart Enterprise Processes (SEPSM) proprietary framework, along with analytics and
technology, which limits upfront investments and enhances future adaptability.
We have global critical mass – 62,000+ employees in 24 countries with key management and corporate
offices in New York City – while remaining flexible and collaborative, and a management team that drives
client partnerships personally.
Our history is unique – behind our single-minded passion for process and operational excellence is the Lean
and Six Sigma heritage of a former General Electric division that has served GE businesses for more than
15 years.
For more information, visit www.genpact.com. Follow Genpact on Twitter, Facebook, and LinkedIn.
PROCESS • ANALYTICS • TECHNOLOGY
© 2014 Copyright Genpact. All Rights Reserved.
14

15. Thank You
Gianni.giacomelli[at]genpact.com
Gaurav.agrawal1[at]genpact.com
www.genpact.com/home/industries/consumer-goods