Understanding the financial, operational and logistical impact of a promotion is one of the biggest challenges facing many of our clients. Connecting the expected promotional volume to the monetary forecast and the production and logistics plan can be critical to the smooth running of the operation. Accurate planning ensures the reduced price, the increased volume, increased variable cost and fixed costs are all considered and evaluated before committing to decisions.
By connecting demand and promotional planning, with the financial planning module, our clients are able to model their promotions before putting them into practice. This allows them to test volume, pricing and product margin including the impact of fixed costs to ensure that the promotions they run are guaranteed to bring in a positive return on investment. Actual performance of promotions can then be tracked against plan in a timely manner to enable the business to respond. Analysis of previous promotional performance can be used to improve the accuracy of future promotions.
Scenario planning is often incorporated as part of the solution. The ability to model and compare variations, in price, product or volume, allows the management team to understand the impact of these changes. Scenario planning may be in the form of sensitivity analysis, or specific known scenarios which require modelling. The application will allow for the scenarios to be captured, compared and the potential responses to be evaluated.