Model for Distributors

Distribution template could be helpful to the wholesales & distribution companies to plan sales, to optimize stock and manage cash flow more efficiently.
What should be my purchasing strategy to meet stock requirements with minimum cash spent? What period cash deficits could be expected? What is the most ambitious but realistic forecast?
These and other questions could be answered with the help of our solution based on IBM Cognos TM1 for a distribution business.

The model is a good start for wholesales and distribution companies and is addressing their requirements in:

  • purchasing planning by vendors in quantities and values to meet sales demands,
  • planning stock balances,
  • reducing procurement budgets while meeting sales demands in full,
  • scenario's planning and business insight of customers and vendors behavior,
  • keeping and comparing different scenarios with each other and actual data,
  • interactive recalculation of P&L, AR, AP, and cash flow within each scenario,
  • having strategic and operational planning capabilities within one system.

Prerequisites and features:

  • Sales plan is required to be setup by planning items/groups and periods
  • Standard costing for planning items/groups
  • Purchasing optimization algorithm finds out most suitable split between vendors for each item to meet sales demand from one side and minimize purchasing amount from another side.
  • Functionality to set up vendor's delivery terms for each planning item/group.
  • Interconnection between sales plan and purchasing plan by means of rules is the basis for interactive recalculation of planning results in the form of P&L and cash flow on flight.
The Model for Distribution consists of the modules: 1 – Sales Planning, 2 – Purchasing and Stock Planning, 3 – Item Cost Planning, 4 – Expenses Planning, 5 – Financial Planning.

Module comprising purchasing and stock balances planning is the main functional block of the template. The module has an interface with the sales planning module through which the sales demand by periods and planning items/groups become available as the starting points for the purchasing optimization algorithm.

Cost planning module calculates the planning cost for each item based planning vendor’s prices and expenses included in the cost.

Standard cost planning tables within financial module allow to enter or upload the items standard cost from an external system.

Expenses planning module supports different types of expenses – related to sales, logistics, assets depreciation, salaries, taxes etc. In current solution for the distribution companies different types of expenses are entered by means of data import procedure or manually.

More details about sales planning and expenses planning modules could be found within Model for Holding Companies.

Financial planning module provides functionality to enter some financial data as loans and other and finally consolidates financial data from all other modules to produce P&L, BS and cash flow reports.

Rolling forecast

Rolling forecast is built on current actuals and extends from current period till the end of the year.

Yearly Budgets

Budget cover the whole year with calculated balances transfer from a previous period to a next period.
Different versions of the budget could be used efficiently to estimate new product launches, cost saving programs etc.
during new scenario generation user can select to create "empty" budget or filled in by the numbers from any of the existing budgets

Configuration parameters entry forms. Data and hierarchies loading procedures. Loading sequence control and error logs.

Purchasing optimization algorithm provides the functionality to meet sales demand for each period and spend less cash by playing with vendor's supply terms.

Automatic recalculation of stock balances for different versions of sales and purchasing plans.

Expenses planning by types and periods along with sales planning, purchasing planning and loans planning result in system calculated P&L, CF and BS reports.

Multi-currency is supported.