Planning and Budgeting
Business Challenge
One of the strategic and most volatile areas impacting the accuracy of the forecast for a large electric utility is residential customer demand. While the revenue team has developed appropriate models to forecast demand, it is unclear how frequently this information is updated and there is no sophisticated model in place to allow the electric utility to understand the impact on its O&M cost structure and its capital requirements of variations in such demand.
The Solution
We designed and developed an Adaptive Planning Excel model as a “proof-of-concept” using economic drivers, along with a supporting process, to forecast the volume level and costs associated with the growth of new residential customer service installations by service region for the electric utility’s distribution business. This resulted in reducing the variance between the quarterly forecast and actual results, resulting in improved achievement of budget targets.
Business Challenge
A diversified packaging company with over 30 operations in 10+ countries around the world was facing serious difficulties in developing a solid grasp on its financial and operational forecasts in a fast changing environment. Their annual budget process took months to complete and would not allow for rapid refreshes. Additionally, their monthly forecast process was limited to a few income statement components, lacking transparency and leading to unpredictable results.
The Solution
We worked together with our client to develop a light touch 15 month rolling forecast process, focusing on the gathering and updating of key business drivers in each operations, first spearheading the process in 5 units representative of the diversity of the company. Unlike the traditional budgeting process, the new rolling forecast system gathers volume and margin information for key accounts by site and uses broad historical averages for more stable components of the cost structure. Balance sheet and cash flow statements are automatically generated based on the key business driver inputs.