By Tom McDonough and Wayne Heather, Oracle
No one expected such a catastrophe. They had forecasts and plans, in-demand products, and buyers lined up in multiple industries. Then suddenly it hit, and nothing was the same.
We’re not talking about COVID-19.
Six months into the global coronavirus pandemic, an angry, drenching storm with 70 mile-per-hour winds barreled across 10 million acres of farmland in central Iowa, wiping out almost half the state’s corn and soybean crops. Iowa isn’t alone. The United Kingdom is facing its worst wheat harvest in 40 years, due to weather.
These circumstances caused painful losses for farmers, but they’re also affecting companies that make and distribute food and ingredients, animal feed, materials, commercial and industrial oils and fuels. Every business counting on those crops is rethinking their plans for 2020 because of the pandemic and unanticipated damage from weather.
This tells us something about supply chains: Every day, they’re at risk of a disruption that could affect short-, mid-, and long-term plans—sometimes all three at once. But disruption can also mean opportunity, requiring supply chains to quickly readjust for heightened demand. We’ve seen this happen in 2020 as companies shifted their business models to meet the need for protective gear, such as face masks and sanitizer.
This tells us another important fact about supply chains: Agility is critical to financial health, in good times and in bad.
Closing the gap between financial and operational planning is foundational to supply chain agility. It shortens the time between change and response, so that businesses can start mitigating risk or gaining market share as soon as possible.
One Oracle customer that manufactures home-cleaning products used integrated planning to improve agility and respond quickly when shelter-at-home orders spurred a drastic jump in demand. They’ve been able to collaborate quickly, modeling potential scenarios to fulfill the new demand, protect financial health, and choose the best path forward.
Here’s how integrated planning works:
Finance and operations are different functions, each with their own responsibilities and metrics, but they both plan as part of their work. When they use integrated cloud applications—such as Oracle Fusion Cloud EPM and Oracle Fusion Cloud Supply Chain Planning—they can work together with a complete view of the company, not just a view limited to their own sphere.
Tactically, the two groups can plan separately, with finance teams using Oracle Cloud EPM and operations teams using Supply Chain Planning. But they’re working from a single set of integrated, real-time numbers. This eliminates the back-and-forth of multiple manual spreadsheets during planning, as well as the errors and confusion caused by different versions of key numbers residing in siloed applications.
As a result, finance and operations teams can more strategically plan for short-, mid-, and long-term business needs, rather than spending time managing the friction caused by working in silos.
Another benefit is more effective plans, because the integrated applications can share information easily. Having an integrated planning platform means teams can plan for workforce needs, expected changes in revenue, or fluctuations in materials costs, and then compare plans with actual performance to quickly change course. With Oracle’s integrated cloud application suite, these numbers are up-to-date and available to anyone authorized to access them.
Advanced capabilities—such as machine learning for predictive forecasting, blockchain and IoT for track-and-trace, process automation, and intelligent assistants—are another advantage of using finance and operations applications that have a common cloud infrastructure. These technologies simply don’t work within siloed and manual applications. With Oracle cloud applications, they can be broadly deployed to detect “normal” unexpected events, such as missed shipments. They can then trigger automated updates and responses across multiple applications (ERP, EPM, and SCM) at the same time.
Here’s an example: One of our customers, LiDestri Foods, a family-owned consumer goods manufacturer, uses fresh vegetables in many of their products. Agriculture carries risk, so the operations team maintains three-year forecast horizons. In addition to their long-term forecasts, LiDestri uses short-term scenario modeling to overcome potential issues, such as an unexpected event restricting supplies. They can immediately push the high-level scenario plan to their financial, operational, or supply chain budgets.
During the rare, unexpected events of 2020, our customers have used these capabilities to do more scenario planning, more frequently. It’s helping them become more agile and adjust effectively, despite facing so many unknowns about the future.
So many factors outside of our control can affect supply and demand, which in turn directly impacts financial performance. Aligning finance and operations through increased scenario planning in the cloud and using advanced technologies such as machine learning is becoming easier with tighter planning windows and more real-time data.
Now that it’s possible, companies that are uniting finance and operations with a shared data set and technology infrastructure are more agile. Whether they’re dealing with good times or bad, unanticipated losses or unexpected opportunities, they have better control over their financial health.
Effective scenario planning and strategic modeling are essential to finance teams right now. That’s why we’re providing free access to Oracle Financial Statement Planning, including Strategic Modeling, to all existing Oracle Planning cloud customers until April 2021. Try these tools to experience how a market-leading application for scenario planning can help your business stay competitive during times of crisis and continue to excel in the new normal of uncertainty.