The State of Advanced Business Planning
September 24, 2008 - The old adage tells us that "if you fail to plan, you plan to fail." Yet, when CGT teamed with Hitachi Consulting, to research Advanced Business Planning (ABP), we found that consumer goods companies have different concepts of planning, and not all plan for the short, intermediate and long-term in the same manner.
Almost all respondents (see Figure 1) create an annual plan and a more near-term rolling forecast (typically a two to 8 quarter horizon), but only 59 percent create a long-range plan (typically a three to five year horizon) covering several years.
Almost all respondents (see Figure 1) create an annual plan and a more near-term rolling forecast (typically a two to 8 quarter horizon), but only 59 percent create a long-range plan (typically a three to five year horizon) covering several years.
This did differ by company size, with larger Tier 1 consumer goods companies conducting long-range planning more often than their smaller counterparts. This may be due to the driver behind these plans: 41 percent of respondents are focusing more attention on ABP to help align strategic corporate objectives with financial plans that often go along with the necessity for longer-term strategic goals for large public companies. Escalating commodity prices and desire to re-forecast and re-plan based on current market trends were also cited as important drivers (18 percent each), but far from the top.
We also looked at the time required to create each of these plans and found a definite discrepancy between the time required to create a long-range plan, with most responses falling between one week and eight weeks or more, and larger companies taking slightly less time. The annual plan was much more consistent, with 64 percent completing their plan in between one and four weeks. The rolling forecast often has a shorter and more near-time focus, and therefore companies are conducting it in a shorter period, with 21 percent reporting a less than one-week completion window, 45 percent are between one week and four weeks, and 40 percent are more than one month. In this case however, the smaller companies were slightly faster than their larger counterparts.
Click here to read this article in its entirety, and find out key challenges around creating each plan type and the expected benefits of improvement.
We also looked at the time required to create each of these plans and found a definite discrepancy between the time required to create a long-range plan, with most responses falling between one week and eight weeks or more, and larger companies taking slightly less time. The annual plan was much more consistent, with 64 percent completing their plan in between one and four weeks. The rolling forecast often has a shorter and more near-time focus, and therefore companies are conducting it in a shorter period, with 21 percent reporting a less than one-week completion window, 45 percent are between one week and four weeks, and 40 percent are more than one month. In this case however, the smaller companies were slightly faster than their larger counterparts.
Click here to read this article in its entirety, and find out key challenges around creating each plan type and the expected benefits of improvement.