Planning models concept

Planning models concept

Without any doubt different type of business may require their specific approaches in planning and budgeting. Company's accounting principals and even data collection systems have an influence on planning approaches as well.

Nevertheless there are a lot of common elements in planning data structures and algorithms. For example, usage of cost types and cost centers, profitability centers, planning figures calculations based on statistics of previous periods, usage of proportional and distribution methods etc.

In our practice we often have found out that business similarities accompany similarities in planning metadata and calculation principals.

For example the company which has been selling hundreds of thousands spare parts and the company which has been selling hundreds of thousands of different instruments had very similar revenue and procurement planning approach. Both of them reduce the sales planning assortment to less than 100 product groups with MRP type purchasing planning in values only.

Noticed similarities encourage us to come up with planning templates approach which is based on:
  • Similarity of planning elements and calculation algorithms for similar businesses.
  • Prebuilt blocks of data structures and calculation rules from which the end system could be composed for particular type of company.
  • Adjustability of the blocks to meet companies specifics (adaptability principal).
  • Ability to plan on more abstract aggregated levels rather than actual data collection levels.

The simplest example of the adaptability principal is a support of hierarchies with different number of levels within the same block. For example, one company could have up to five levels item’s hierarchy while for another only two levels are enough. In both cases the same block can be used. The only difference will be that for the first company five levels dimension will be uploaded while for the second one two levels dimension will be required to be uploaded into the same block.
Capability to plan on more abstract consolation levels gives an opportunity to start planning before data hierarchies full harmonization is achieved for all accounting / ERP systems.
The difficulties with plan-fact reports could be overcome by agreeing abstract/consolidation levels within organization for plan and actual data comparison. Such agreement gives the benefit to implement plan-fact reporting from the beginning and harmonize planning and actual levels much more smoothly at further stages of systems development.

Anyway if some mapping will be required it could be solved by one or another way:

  • Data is consolidated up to planning levels by data downloading procedures extracting master data hierarchies from ERP systems.
  • Planning levels could be split by some sort of distribution rules down to more detailed planning levels based on associated actual data gathered on the desired levels.

Templates approach gives our customers an advantage to select the most suitable set of blocks rather than to create them from scratch and reduce through that implementation time and costs. Another important effect is that Implementation project becomes more transparent and has clear number of steps.

Implementation as a number of six clear steps:

  • Selection of the most suitable template and blocks.
  • Master data hierarchies submission in predefined formats.
  • Master data hierarchies upload to build system’s dimensions and multi-dimensional data structures.
  • System Integration test on test data.
  • System adjustments if required.
  • Real data uploading/entering to get the first version of the plan.