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02.10.2023

« Everything according to plan »: how digital transformation optimises business processes

Yulia Staneva, partner and Planingo’s business consulting practice lead, spoke about the effectiveness of digital transformation when it comes to business planning. 

In today’s realities of constant change, businesses are faced with an urgent question: is it possible to effectively plan financial flows and manage supply chains? According to Yulia Staneva, Partner and Business Consulting Practice Leader at Planingo, the answer is digital transformation in integrated planning, which makes businesses more adaptable, helping them to quickly change operational and strategic plans to meet new challenges.

 

Julia, what does digital planning transformation mean for businesses? 

– Digital transformation implies a change in the business model, whereby management decisions are made on the basis of digital data sets. This is usually preceded by a process of automation, with manual operations transferred over to IT systems. In this way, digital data appears in the company, with which more advanced tools can already be implemented. For example, Control Tower, which identifies incidents in extensive supply chains and helps respond to them in real time. Or Digital Twin — a digital representation of physical assets that shows the impact of different factors on them, which helps to plan and make decisions.

 

In which business segment is it important to use different planning tools?

– The correct answer to this question is every segment, as the uncertain and volatile business environment has essentially become the new normal for companies. We have seen in recent years how a pandemic, geopolitical instability in the region, trade wars and sanctions have forced businesses to constantly adapt to completely new conditions: changing supplier structures, sales channels, transport routes, financing schemes, etc.

This new normal is pushing businesses to plan for ever-shorter timeframes, allowing them to adequately assess the immediate future. Many organisations are launching joint planning with their strategic partners — be they customers or suppliers. This is done to be proactive and coherent in the business’ response to change, but such tasks are very difficult to maintain manually, and the need for digital tools is emerging.

 

Is there technology that can support business planning in spite of the backdrop of constant change? 

– In recent years, there has been a real revolution in the digitalisation of integrated business planning. IT platforms with innovative approaches, often without even requiring any programming, have literally burst onto the market and quickly taken the lead. These systems link operational and financial plans, use advanced algorithms for complex calculations, help build complex business processes, allow users to work with scenarios and various versions of plans, and ensure good cooperation between all departments.

Interestingly, if you look at ratings of planning systems, many of today’s market leaders did not even exist 10-15 years ago. IT platforms such as Anaplan and o9 have grown quite quickly from start-ups to leading vendors, developing functionality at an impressive rate.

 

What major planning challenges can you highlight?

– I would highlight four main challenges. The first is the increased frequency of planning and re-planning cycles due to the variability of the environment. The second is the cross-functional nature of the planning process, which creates conflicts of interest between departments. The third is the unavailability of data at the right time and place, which significantly reduces the quality of management decisions. And the last one is outdated IT systems, which nevertheless continue to be used by businesses even when they can no longer keep up with the current realities.

 

What about business in Kazakhstan: are there any regional specifics when it comes to planning? 

– Planingo has been present in the Kazakhstan market for several years now, and we’ve seen that in terms of maturity level, Kazakh business, like any other, needs more advanced processes and systems to promote effective management. Perhaps two peculiarities can be pointed out.

Many industrialised companies still prefer production logic to commercial logic — I think the roots of this can be found in their history of enterprise, often established during the period of planned industry. And as businesses in Kazakhstan continue to actively develop and enter new markets, companies are finding they need to revise their processes and decision-making algorithms in order to compete successfully and remain sustainable.

In addition, interesting challenges are coming from the region’s financial institutions. It’s no secret that consumer banking and financial services in Kazakhstan have developed truly advanced management systems and business models that require support from the most advanced IT solutions.

 

What role does the forecasting stage play in business planning?

– Demand forecasting is one of the steps in the classic sales and operations planning (S&OP) process. You can’t build a plan without forecasting, and it directly affects the entire operational cycle. But its importance to the business differs from industry to industry.

For example, in retail, companies strive to have the most up-to-date forecast at any moment. For this purpose, they develop demand sensing — they capture the slightest market signals in real time, for example, with the help of payment data at the point of sale. This information is processed by pattern-recognising algorithms, which can then quite accurately predict the impact on sales of various factors, such as the weather or an event in or around the shop.

In industries such as metals, however, demand is predicted more strategically, as the entire production plan can be fully planned for contracted orders on the operational horizon.

 

How does one determine when a business needs optimisation, and what effective tools can be used for its implementation? 

– Usually a business sees for itself that it is time to optimise. The request for change comes either from above — when top management discovers that the company is inefficient and losing margin, or from below — when employees involved in operations realise that it is impossible to perform their work tasks under the current practices. So how do you figure out what work needs to be done? I would recommend first conducting a general diagnosis: what level of process maturity the company is at, what its strategic goals are, whether the process is convenient for the participants involved, whether the business customers are satisfied with the result. All of this will give a better understanding of the current pain points and goals, which will further help to structure the approach to the optimisation project. 

 

How do you measure the value of a properly designed planning process? 

– Value can come from many different areas. For example, it can be expressed in terms of improved levels of service, reduced missed sales, an optimised inventory… Sometimes the project pays for itself entirely in the space of a year a just by reducing write-offs, or by implementing an optimiser for the production programme, or thanks to a sales plan that brings maximal margins.

In my experience, setting up an S&OP process not only solves problems that companies recognise, but also identifies inefficiencies that may not have been visible before. This happens through critical reflection on historical approaches and calculations, which is inevitable during digitalisation projects. In this way, the resulting value of the planning transformation can noticeably exceed initial expectations and estimates, increasing companies’ profits.

Zhadi Turgumbaeva

Source: Forbes Kazakhstan

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