Under even the best circumstances, companies must manage fluctuating market demand for their products. Failing to keep pace, of course, can result in lost revenue as customers flock to competitors; meanwhile, overestimating demand leads to surplus inventory that eats into profit margins. That’s why demand planning — a complex network of sales data, product life cycle management, and inventory management — is critical to balancing inventory levels with customer satisfaction. In other words, it’s critical to enabling business agility.
Demand shocks can knock planning off course
Collaboration and coordination have always been essential to demand planning. But when a once-in-a-century pandemic shocks revenue and makes income tough to predict, charting the proper course forward becomes even more complex. Still, companies that find a way to harness the best practices and advantages of modern planning will likely be in a far better position to anticipate what’s next and respond quickly when it comes.
I’m happy to say that my employer, Reily Foods, is one of those companies. Established in 1902, Reily is a New Orleans-based family-owned business that manufactures and markets food brands ranging from New England Coffee and Blue Plate Mayonnaise to baking ingredients such as Swans Down and Presto cake flour.
Most years, demand for baking products spikes around late March or early April, just before Easter, and again in November right before Thanksgiving. But with the sudden onset of COVID-19, Americans who found themselves cooped up at home turned en masse to the existential comforts of baking. Demand for Reily’s flour skyrocketed, and we began blazing through our on-hand inventory.
Modern planning empowers companywide collaboration
Lucky for us, we started using Workday Adaptive Planning in 2019. As we moved away from spreadsheets, Workday’s modern, active planning approach fundamentally changed the way we worked. We rolled it out first with our finance team. But as we loaded sales forecasts into the system, we understood our sales team could benefit from using it as well. Soon after, we realized that if we added our operations group and modeled out our operations plan, we would plan our entire business in Workday and would all be working from the same source of truth.
Prior to this transition, when we were still using Excel, our FP&A team was stuck in static planning, using past performance to try to inform current results or future plans. Even worse, we always wondered if we were working from the latest version and, if not, who had it. We wasted time working in reactive mode and wrestling with data because we had no true north. When we switched to an active planning system powered by real-time information, we immediately raised the caliber of our work and began creating forward-looking and strategic budgets, forecasts, and plans.
Freeing up time and resources for more strategic planning
Even more importantly, we dramatically cut the amount of manual work our small finance team has to do. The difference is stark. For instance, changing a budget for one of our food manufacturing plants previously required calculating hours and then manually creating rates. Now, if we decide to add $50,000 to a budget, the rates automatically calculate in real time, and the impact becomes immediately clear. We were able to shave weeks off the time required to move from sales forecast to cost accounting — a huge game changer for a lean team.
When COVID-19 hit, these capabilities became even more important. With a cloud-based planning platform, we were able to ask “what-if” questions and build out additional scenario-based forecasts to address market conditions that seemed to change hourly. This planning — and our resulting ability to provide leadership with a range of possible outcomes — would have been virtually impossible if we were still relying on manual processes. Even during times of extreme volatility, scenario planning allows us to run our business with more predictability to achieve better performance. We weren’t the only ones: Early in the pandemic, Workday found itself processing up to 30 times more forecasts and scenarios for planning customers than usual.
Companywide planning spurred agility in the toughest of times
By linking every department across the country through planning that’s continuous, comprehensive, and collaborative, Workday Adaptive Planning made us a more agile company and equipped us with the actionable insight we needed to meet tremendous demand during a uniquely challenging time. We dissolved silos and ensured that all our plans aligned with our financial and strategic goals, while creating a continuous planning environment that allowed everyone to make changes in real time so the latest forecast was always just a click away. And because we created this alignment pre-pandemic, we were able to react much more quickly and effectively when the world — and our business — shifted virtually overnight.