[Case Study] How We Optimized Multi-Dimensional Planning for the National Lottery
Updated: Mar 23, 2022
Demand planning is one of the most important processes for any production and distribution company. It optimizes the business’s ability to meet the demands of its customers as efficiently as possible. To make demand planning as effective as possible, demand planners require inputs from multiple sources: sales and marketing, purchasing, supply chain, operations, production, and finance. Often, executives in charge of product portfolio management are also included in the demand planning.
As you can presume, the process is as complex as they get.
During the 2020 crisis, a lot of companies decided to board the digitalization train, but 70% of businesses still solve demand planning problems using only spreadsheet tools. Excel is simply not enough anymore, and it’s starting to create more problems than it solves.
We in Farseer know about this first hand because solving supply chain and demand planning-related problems are one of the most common reasons companies reach out to us.
Here’s one of their stories.
Croatian Lottery Revenue Planning Problems
In the summer of 2020, the Croatian National Lottery contacted us. More precisely, their financial controlling department. They needed help with their budgeting and revenue planning.
At the time, the company had over 1300 employees, 300 retail locations, 30 products, 6 regions in which they operated, and 5 sales channels in each region. It was truly complicated to create budgets and financial plans using only Excel and historical data extracted from their ERP system. And that was exactly what they would do.
In the case of the Lottery, there are no warehouses and stock supplies that had to be accounted for in supply chain processes, but that doesn't make them any simpler.
They would create their revenue plan in a top-down budgeting process, meaning that the management would define the plan revenue values at the product and region level. After that, the Controlling department had to break down the top-level numbers sent from the management down to all products, regions, and sales channels. The final numbers the controlling department got had to match the top-down inputs from the management, together with the historic data and trends pulled from the ERP.
The process started with extracting historic data from ERP to Excel. Based on the historic actuals from the ERP, the National Lottery controlling department would calculate allocation ratios for each category (product/region/sales channel).
The tricky part here was going back and forth between these constraints. Numbers had to be manually calculated in Excel until they all checked out and matched the initial plan values sent by the management. The entire process was grossly ineffective and took three weeks to finish!
We Implemented a One-Click Solution
To help our clients, we leveraged Farseer’s Multi-dimensional planning set of features.
Farseer uses proprietary optimization algorithms to distribute revenue plan values based on historical data and top-level constraints. Users can simply edit the revenue plan number for a single line item (e.g. game A revenue in region B at sales channel C) and Farseer’s algorithms will calibrate the entire company-wide revenue plan to fit the initial top-level goals set by the management.
We are particularly proud of the fact that we shortened the revenue planning time from 3 weeks to just one click. Once the controlling department had the top-down constraint numbers, that was all it took to create a detailed company-wide revenue plan.
Besides revenue planning, the National Lottery uses Farseer for faster expense planning. Costs are mostly repetitive, with variable yearly increases or decreases, defined for each expense category by the department managers. Farseer automatically generates P&L statements at the company level, which can be additionally adjusted by the user if needed.
By eliminating manual spreadsheet work, finance and controlling departments could focus on strategic planning and spend significantly less time on operational tasks.
“With Farseer we have shortened the planning cycle dramatically and made it more collaborative.”
Martina Černi, Head of Controlling
Effective demand planning requires coordination across all company departments. When done right though, the balance between inventory levels and customer demands can make a world of difference for the company's bottom line.
COVID-19 crisis showed that a lot more can be done in terms of improving IT capabilities in companies. Dedicated software solutions are not necessarily the ONLY solution for all types of companies. Smaller businesses can get by with spreadsheet tools for a while, but at one point, something has to give. If your entire organization is blocked for weeks at a time because you are creating all your financial plans in Excel, maybe it’s time to up your company’s IT game.
Farseer dramatically shortens planning cycles, improves planning accuracy and eliminates manual work. We combine the power of AI with human knowledge, for the most accurate operations and financial plan.
If you would like to maximize revenue, optimize supply and improve your Cash-Flow, sign up for Farseer Demand Planning now.