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How CPG industry is evolving towards a new era, starting from financial planning

Aug. 11 2020 by Marco Van der Kooij, Managing Director - ForSight Consulting

Strategic Planning Profitability Analysis CPG

Consumer Packaged Goods or Fast Moving Consumer Goods is a very competitive industry. Brands are fighting for shelf-space and the time to market for product launches is shrinking. At the same time fluctuation in raw material prices and economic uncertainty are increasing. Then there is the recent temporary closure of production facilities and subsequent supply chain interruption.

So what are the impacts and how have your planning and reporting systems stood up?

If you need invoice and off-invoice discounts to recover your business, what is their effect on the gross to net sales margin? Fast and clear, multidimensional insight is essential regarding all costs and profits throughout the value chain e.g. by product/brand/region/customer segment/distribution channel and with activity-based costing. Preferably through a rolling forecast with direct cashflow planning and scenario planning for what-if analysis, providing forward-looking insights to optimize, prioritize and focus on the right investments and mitigate risks at the same time.

Recent economic circumstances and social disruption, like closing and opening of borders and production facilities, demonstrated the importance of immediate insight in key financial and non-financial data. Often this information is collected outside of current planning and reporting systems, as these are embedded in outdated planning and reporting processes to provide data after the month end closing and not in real-time when it is needed most.

What bottlenecks and shortcomings have you experienced in your planning and reporting process and legacy systems when it has been necessary to provide information faster than ever in different formats? To provide textual context to the data for storytelling and to provide actionable information for example? Here are some important questions to ponder:

  • How well can you trust your data?
  • How quickly were you able to share data for collaboration when staff were working from home?
  • What self-service capabilities do you provide to empower operational data-driven decision making?
  • How quickly could you anticipate increasing online sales, but also increasing returns with their immediate impact on the bottom-line and cash flow?

The answers to these questions and many more will tell you how agile you are in providing actionable forward-looking information. The size, complexity and distributed nature of data needed for increasingly closer to real-time and optimized decision making, means that rigid processes, architectures and tools are breaking down.

Adaptability, agility and creativity are the most important characteristics for a company to survive. This needs to be fed fast by reliable, accurate and actionable information with context through a modern cloud-based planning and reporting system that gives you the velocity you need for your business, going beyond traditional planning. And the lockdown and today’s market uncertainty showed that doing nothing, trying to face the challenge by dealing with old fragmented legacy systems could even cost more.

Vemedia, a CPG company based in the Netherlands, took action already and now they are able to perform a very detailed profitability analysis by brand by leveraging CCH Tagetik. Discover more about their story by watching their video interview here!

Corporate Performance Management

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