Data processing. Explaining how to do something. Planning to expand the system. New procedures in

How to Write a Restaurant Business Plan

Set your restaurant up for long-term success

Many people dream of opening a restaurant, seeing it as an opportunity to turn a love for entertaining or cooking into a business. Unfortunately for many restaurateurs, the reality of running a restaurant is not what they expected. Long hours, low pay, and a lot of stress cause many entrepreneurs to close up shop after a few short years.

One reason for the high failure rate in this industry is that restaurant owners fail to treat their restaurant as a business from the very beginning. They have no plan to deal with problems and unexpected expenses, and they don’t understand the true costs associated with opening a restaurant.

One way to prevent these types of problems is to develop a well-written business plan. By writing a restaurant business plan, you show investors or lenders you have a clear contingency plan for handling any problems that arise.

What a Plan Can Do for You

A restaurant business plan needs to be structured like most business plans, but the details need to address your specific vision for a restaurant and its place in your local market. Start with the same general components of a standard business plan, then gear it specifically to the restaurant industry and your plans of succeeding in that industry.

Executive Summary

This overview needs to introduce your entire business plan with a couple of key broad strokes: What niche will your restaurant fill in the local dining market, and what role will you specifically play?

Make it clear to the reader (a potential investor) what kind of restaurant you will be. From fast-casual and sports bars to fine dining or ethnic cuisine, there are all kinds of restaurants. Let the investor know how you’ll fit into the market, including the name of your restaurant and its location.

Be clear about your role in the business as well. Restaurants are multilayered operations. Menus must be built, food must be cooked, finances must be managed, customers must be served, and marketing efforts need to expand your clientele. One person trying to do all that would be overwhelmed, so include your partners in your executive summary. If you haven’t found the perfect partners yet, explain the roles that you intend to eventually delegate to partners. If you’re an experienced chef with a plan for a fine dining restaurant, for example, then make it clear to readers that your primary role will be in the kitchen and you’ll hire experienced professionals to handle other key roles.

Company Description

This business analysis offers a first look at all your key business details. Where will you be located? What’s your mission? Who are your target customers? What kinds of dishes will make up your menu? What sets your restaurant apart from other options in the area? Will the population base support another establishment like yours?

You’ll also want to include basic details like your company’s legal name, business structure, ownership, and management team. Keep everything high-level here, and save the deep details for later in your plan.

Market Analysis

This is often referred to as a marketing strategy, and there are three key components. Know how to address the specifics of your plan within each one.

  • Industry: Who will you be serving? Is your restaurant going to cater to the older retired generation at lunchtime? Single professionals at dinner? Families with young children? Explain your customer base and why they are going to flock to your new restaurant instead of your competitors. You’ll have touched on this in your executive summary and company description, but this is where you need to dig into the details of the local restaurant community and show how you fit.
  • Competition: Who is your competition, and how will you distinguish yourself? Again, you’ll have touched on this already, but use this section of your business plan to dig deeper into the details. Loyal customers at established restaurants aren’t likely to change their dining habits unless your menu, atmosphere, or approach somehow sets itself apart from what everyone else is doing. Show your reader that you understand—in detail—what other restaurants are doing and how you’re going to be different.
  • Marketing: What methods do you plan to use to promote your restaurant? Perhaps more importantly, who will be handling this? Following the example of the owner focusing on the kitchen, someone with experience promoting and marketing restaurants should be in charge and have a plan. Let investors know you’ve brought a local food-scene expert on board for that purpose, and explain their marketing plan.

Business Operations

Also known as the products or services section, this is where you tell investors about your hours and how many employees you plan to hire. It’s also where you explain the benefits of your establishment for customers, such as its convenient downtown location or its proximity to the local interstate exit.

This is also a good place to mention any close ties you have to local restaurant vendors, such as food supply companies or local farms, that will give you a competitive edge. For example, a liquor license is expensive and can be difficult to obtain in some markets. Here, you can explain to investors that you’ve hired a consultant who specializes in negotiating and purchasing liquor licenses to handle that aspect of your business.

Management and Ownership

Who is going to helm the ship? Who will cover the aspects of the business you can’t? Beyond ownership, explain your management hierarchy, as well. For example, will managers for specific areas—dining room, bar, business, etc.—report to a general manager who then reports to you? Or, will everyone report to you equally? The structure you choose is less important than having one that works for you. You also want to ensure that the function of the structure is easy to explain to your investors or lenders.

Financial Analysis

Here, you want to list the projected growth of your new restaurant. You should include a general start-up budget, as well as a profit and loss statement that projects how much are you going to spend versus how much you are going to make.

Lenders and investors want to see that they are going to get a return on their investment, so give them a picture—and be realistic—of how that’s going to happen. Put the work in to accurately project your labor and food costs, along with other operational costs, and compare those against the expected sales growth of your restaurant. A detailed financial plan will provide a road map for evaluating how your business is doing each year.

Outside Help

Many people opening a restaurant are not experienced business professionals, so it’s a good idea to seek out a business partner with requisite experience. If you can’t find a partner, consider hiring a consulting firm that specializes in helping new restaurants get their operations off the ground. At a minimum, enlisting a professional who knows how to write a business plan will ensure you’ve got a good chance of enduring those first tumultuous years.

Chapter 2: Business Processes, Information Systems, and Information

Термины в модуле (20)

Business Professional’s Skill-sets:
1) Ability to create process models
2) Discuss changes to processes
3) Know how information systems can support processes

Business Process Modeling Notation (BPMN) = an international standard for creating business process diagrams
*the start of a business process is symbolized by a circle having a thin border, and the end of a business process is symbolized by a circle having a thick border
*boxed plus sign indicates a subprocess and is used when the work to be done is complex and requires a process diagram of its own

— Swimlane Format = a graphical arrangement in which all the activities for a given role (job type) are shown in a single vertical line

• Activities = each swimlane has activities, which are specific tasks that need to be accomplished as part of the process

• Role = a subset of the activities in a business process that is performed by an actor (person, group, department, organization, or information system)
*Write name of the role on top of a swimlane because a given role may be fulfilled by many people and because a given employee may play many roles)
*Sometimes, a role can be fulfilled by an information system

• Repository = a collection of data that is stored within the business process (can be computer databases, collections of files in the cloud, or printed records stored in a file cabinet)

• Data Flows = the dashed lines that represent the movement of data from one activity to another (data can be delivered through email, text message, phone, fax, or by other means)

• Sequence Flows = the solid line between the activities Select Vendor Product and Negotiate Prices and Terms means that after a Buyer finishes the Select Vendor Product activity, the Buyer’s next action is to perform the Negotiate Prices and Terms activity

The Role of Finance in the Strategic-Planning and Decision-Making Process

Financial Goals and Metrics Help Firms Implement Strategy and Track Success

The fundamental success of a strategy depends on three critical factors: a firm’s alignment with the external environment, a realistic internal view of its core competencies and sustainable competitive advantages, and careful implementation and monitoring. [1] This article discusses the role of finance in strategic planning, decision making, formulation, implementation, and monitoring.

Any person, corporation, or nation should know who or where they are, where they want to be, and how to get there. [2] The strategic-planning process utilizes analytical models that provide a realistic picture of the individual, corporation, or nation at its “consciously incompetent” level, creating the necessary motivation for the development of a strategic plan. [3] The process requires five distinct steps outlined below and the selected strategy must be sufficiently robust to enable the firm to perform activities differently from its rivals or to perform similar activities in a more efficient manner. [4]

A good strategic plan includes metrics that translate the vision and mission into specific end points. [5] This is critical because strategic planning is ultimately about resource allocation and would not be relevant if resources were unlimited. This article aims to explain how finance, financial goals, and financial performance can play a more integral role in the strategic planning and decision-making process, particularly in the implementation and monitoring stage.

The Strategic-Planning and Decision-Making Process

1. Vision Statement

The creation of a broad statement about the company’s values, purpose, and future direction is the first step in the strategic-planning process. [6] The vision statement must express the company’s core ideologies—what it stands for and why it exists—and its vision for the future, that is, what it aspires to be, achieve, or create. [7]

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2. Mission Statement

An effective mission statement conveys eight key components about the firm: target customers and markets; main products and services; geographic domain; core technologies; commitment to survival, growth, and profitability; philosophy; self-concept; and desired public image. [8] The finance component is represented by the company’s commitment to survival, growth, and profitability. [9] The company’s long-term financial goals represent its commitment to a strategy that is innovative, updated, unique, value-driven, and superior to those of competitors. [10]

3. Analysis

This third step is an analysis of the firm’s business trends, external opportunities, internal resources, and core competencies. For external analysis, firms often utilize Porter’s five forces model of industry competition, [11] which identifies the company’s level of rivalry with existing competitors, the threat of substitute products, the potential for new entrants, the bargaining power of suppliers, and the bargaining power of customers. [12]

For internal analysis, companies can apply the industry evolution model, which identifies takeoff (technology, product quality, and product performance features), rapid growth (driving costs down and pursuing product innovation), early maturity and slowing growth (cost reduction, value services, and aggressive tactics to maintain or gain market share), market saturation (elimination of marginal products and continuous improvement of value-chain activities), and stagnation or decline (redirection to fastest-growing market segments and efforts to be a low-cost industry leader). [13]

Another method, value-chain analysis clarifies a firm’s value-creation process based on its primary and secondary activities. [14] This becomes a more insightful analytical tool when used in conjunction with activity-based costing and benchmarking tools that help the firm determine its major costs, resource strengths, and competencies, as well as identify areas where productivity can be improved and where re-engineering may produce a greater economic impact. [15]

SWOT (strengths, weaknesses, opportunities, and threats) is a classic model of internal and external analysis providing management information to set priorities and fully utilize the firm’s competencies and capabilities to exploit external opportunities, [16] determine the critical weaknesses that need to be corrected, and counter existing threats. [17]

4. Strategy Formulation

To formulate a long-term strategy, Porter’s generic strategies model [18] is useful as it helps the firm aim for one of the following competitive advantages: a) low-cost leadership (product is a commodity, buyers are price-sensitive, and there are few opportunities for differentiation); b) differentiation (buyers’ needs and preferences are diverse and there are opportunities for product differentiation); c) best-cost provider (buyers expect superior value at a lower price); d) focused low-cost (market niches with specific tastes and needs); or e) focused differentiation (market niches with unique preferences and needs). [19]

5. Strategy Implementation and Management

In the last ten years, the balanced scorecard (BSC) [20] has become one of the most effective management instruments for implementing and monitoring strategy execution as it helps to align strategy with expected performance and it stresses the importance of establishing financial goals for employees, functional areas, and business units. The BSC ensures that the strategy is translated into objectives, operational actions, and financial goals and focuses on four key dimensions: financial factors, employee learning and growth, customer satisfaction, and internal business processes. [21]

The Role of Finance

Financial metrics have long been the standard for assessing a firm’s performance. The BSC supports the role of finance in establishing and monitoring specific and measurable financial strategic goals on a coordinated, integrated basis, thus enabling the firm to operate efficiently and effectively. Financial goals and metrics are established based on benchmarking the “best-in-industry” and include:

1. Free Cash Flow

This is a measure of the firm’s financial soundness and shows how efficiently its financial resources are being utilized to generate additional cash for future investments. [22] It represents the net cash available after deducting the investments and working capital increases from the firm’s operating cash flow. Companies should utilize this metric when they anticipate substantial capital expenditures in the near future or follow-through for implemented projects.

2. Economic Value-Added

This is the bottom-line contribution on a risk-adjusted basis and helps management to make effective, timely decisions to expand businesses that increase the firm’s economic value and to implement corrective actions in those that are destroying its value. [23] It is determined by deducting the operating capital cost from the net income. Companies set economic value-added goals to effectively assess their businesses’ value contributions and improve the resource allocation process.

3. Asset Management

This calls for the efficient management of current assets (cash, receivables, inventory) and current liabilities (payables, accruals) turnovers and the enhanced management of its working capital and cash conversion cycle. Companies must utilize this practice when their operating performance falls behind industry benchmarks or benchmarked companies.

4. Financing Decisions and Capital Structure

Here, financing is limited to the optimal capital structure (debt ratio or leverage), which is the level that minimizes the firm’s cost of capital. This optimal capital structure determines the firm’s reserve borrowing capacity (short- and long-term) and the risk of potential financial distress. [24] Companies establish this structure when their cost of capital rises above that of direct competitors and there is a lack of new investments.

5. Profitability Ratios

This is a measure of the operational efficiency of a firm. Profitability ratios also indicate inefficient areas that require corrective actions by management; they measure profit relationships with sales, total assets, and net worth. Companies must set profitability ratio goals when they need to operate more effectively and pursue improvements in their value-chain activities.

6. Growth Indices

Growth indices evaluate sales and market share growth and determine the acceptable trade-off of growth with respect to reductions in cash flows, profit margins, and returns on investment. Growth usually drains cash and reserve borrowing funds, and sometimes, aggressive asset management is required to ensure sufficient cash and limited borrowing. [25] Companies must set growth index goals when growth rates have lagged behind the industry norms or when they have high operating leverage.

7. Risk Assessment and Management

A firm must address its key uncertainties by identifying, measuring, and controlling its existing risks in corporate governance and regulatory compliance, the likelihood of their occurrence, and their economic impact. Then, a process must be implemented to mitigate the causes and effects of those risks. [26] Companies must make these assessments when they anticipate greater uncertainty in their business or when there is a need to enhance their risk culture.

8. Tax Optimization

Many functional areas and business units need to manage the level of tax liability undertaken in conducting business and to understand that mitigating risk also reduces expected taxes. [27] Moreover, new initiatives, acquisitions, and product development projects must be weighed against their tax implications and net after-tax contribution to the firm’s value. In general, performance must, whenever possible, be measured on an after-tax basis. Global companies must adopt this measure when operating in different tax environments, where they are able to take advantage of inconsistencies in tax regulations.


The introduction of the balanced scorecard emphasized financial performance as one of the key indicators of a firm’s success and helped to link strategic goals to performance and provide timely, useful information to facilitate strategic and operational control decisions. This has led to the role of finance in the strategic planning process becoming more relevant than ever.

Empirical studies have shown that a vast majority of corporate strategies fail during execution. The above financial metrics help firms implement and monitor their strategies with specific, industry-related, and measurable financial goals, strengthening the organization’s capabilities with hard-to-imitate and non-substitutable competencies. They create sustainable competitive advantages that maximize a firm’s value, the main objective of all stakeholders.

[1] M.E. Porter, “What is Strategy?” Harvard Business Review, 74, no. 6 (1996). [purchase required]

[2] D. Abell, Defining the Business: The Starting Point of Strategic Planning, (New Jersey: Prentice-Hall, 1980).

[3] J.S. Bruner, The Process of Education: A Landmark in Education Theory, (hyperlink no longer accessible). (Boston: Harvard University Press, 1977).

[5] C.S. Clark and S.E. Krentz, “Avoiding the Pitfalls of Strategic Planning,” Healthcare Financial Management, 60, no. 11 (2004): 63–68.

[7] J.C. Collins and J.I. Porras, “Building Your Company’s Vision,” Harvard Business Review, 74, no. 5 (1996). [purchase required]

[8] Pearce and Robinson.

[9] J.A. Pearce and F. David, “Corporate Mission Statement: The Bottom Line,” The Academy of Management Executive, 1, no. 2 (1987): 109–116. [purchase required]

[10] R.K. Johnson, “Strategy, Success, a Dynamic Economy, and the 21st Century Manager,” The Business Review, 5, no. 2 (2006).

[11] M.E. Porter, “How Competitive Forces Shape Strategy,” Harvard Business Review, 57, no. 2 (1979).

[13] A.A. Thompson, A.J. Strickland, and J.E. Gamble, Crafting and Executing Strategy, (New York: McGraw-Hill/Irwin, 2009).

[14] Pearce and Robinson.

[15] Thompson, Strickland, and Gamble.

[16] B. Jovanovic and G.M. MacDonald, “The Life Cycle of a Competitive Industry,” The Journal of Political Economy, 102, no. 2 (1994: 322–347).

[17] C.A. Lai and J.C. Rivera, Jr., “Using a Strategic Planning Tool as a Framework for Case Analysis,” Journal of College Science Teaching, 36, no. 2 (2006): 26–31.

[18] M.E. Porter, Competitive Advantage: Techniques for Analyzing Industries and Competitors, (New York: The Free Press, 1980).

[19] Thompson, Strickland, and Gamble.

[20] R.S. Kaplan and D.P. Norton, “Using the Balanced Scorecard as a Strategic Management System,” (hyperlink no longer accessible). Harvard Business Review, 74, no. 1 (1996).

[22] Peter Grant, “How Financial Targets Determine Your Strategy,” Global Finance, 11, no. 3 (1997): 30–34

[24] Sidney L. Barton and Paul J. Gordon, “Corporate Strategy: Useful Perspective for the Study of Capital Structure?” The Academy of Management Review, 12, no. 1 (1987): 67–75.

[25] B.T. Gale and B. Branch, “Cash Flow Analysis: More Important Than Ever,” Harvard Business Review, July–August (1981).

[26] H.D. Pforsich, B.K.P. Kramer, and G.R. Just, “Establishing an Effective Internal Audit Department,” Strategic Finance, 87, no. 10 (2006): 22–29.

[27] Q. Lawrence, “Hedging in Perspective,” Corporate Finance, 115, no. 36 (1994).

Sales and operations planning: From data to information, from information to decision-making

Johanna Småros
Group CMO

Michael Falck
President, North America

Sales and operations planning (S&OP) has been a hotly debated topic in recent years. Some think it’s simply a collection of old ideas under a new name that’s designed to sell consultancy services. Others swear by S&OP process development and point to all the benefits that have flowed from it.

We believe we can reconcile both sides in this debate and that, in many respects, both are right. S&OP process models have been in development since the 1980s and they largely draw upon familiar and proven ideas. On the other hand, these processes have become increasingly topical throughout many sectors, and not just among managers in large global corporations.

This topicality is driven by an ever increasing need for planning:

  • In traditional industries, falling margins are driving the search for efficiencies which, in turn, translates into reduced buffers. When there are no longer storage or capacity buffers, good forecasting and planning are needed to maintain good service levels.
  • Shorter product life cycles and faster changing markets expose companies to increased risks which, again, increase the need for good forecasting.
  • In many industries, intense consolidation has led to the creation of larger corporations. The management of extensive production and distribution networks necessitates moving from unit-specific planning, to planning that applies across the entire corporation.
  • The shift to Asia of production and procurement has forced many companies to extend their advance-planning period.
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At the same time, significant advances in collecting, processing and communicating data have made the benefits of developing S&OP processes available to a wide range of businesses, not just the very largest corporations.

In this article, we take a brief look at what sales and operations planning actually means and explain how data systems affect the execution of S&OP processes.

S&OP’s goal: better decisions

The aim of sales and operations planning is to get the whole company working from the same plan. Instead of having separate objectives and forecasts for sales, production, procurement, and the financial department, the S&OP process aims to create a coherent plan for the company that combines all these elements, that reflects the chosen strategy, that can be executed in practice, and is as comprehensive as possible.

Figure 1: The aim of the S&OP process is to create a consistent operation plan for the company that follows the chosen strategy, can be carried out in practice, and is as extensive as possible.

Identifying and solving any problems related to realising plans or achieving goals is essential to the S&OP process. A sales plan that promotes rapid growth may, for example, lead to resourcing problems in production. When this happens a company needs to examine its options, for instance increasing production capacity (perhaps through additional work shifts) or prioritisation between product families (for example, accepting the risk to the service levels of another product family as a result of temporarily lowering its stock level to create capacity elsewhere). When making such decisions, it’s important to consider the overall picture – i.e., the company’s strategy and the effects of the decisions on customer satisfaction, costs, and profitability. Instead of leaving the production department on its own to solve the resourcing problems caused by the growth of sales, the company should foresee the likelihood of additional sales and plan a response beforehand in case production capacity becomes a bottleneck.

Although a good S&OP process is an excellent way to improve of the flow of information between various parts of a business, the primary benefit of the S&OP process is the action-related decisions that stem from it. If the S&OP process does not directly result in improved decision making then, to put it bluntly, you’re wasting your time.

The S&OP process in practice

There are plenty of examples of S&OP processes out there. We suggest that you familiarise yourself with them and use those that are most appropriate to support your development process. Of course every company has its own ways of working so don’t be afraid to adjust these to your specific needs. A good benchmark when developing processes is to weigh workload and time requirements against the significance and quality of the resulting decisions and ensure they are in balance.

Arguably the greatest challenge is in deciding on the right degree of detail with which to engage: planning and discussion need to be kept on topic and on track, yet decisions should be based on sufficient and accurate information, so you are across everything you need to know to make that decision.

Figure 2: An example of the structure of an S&OP process (source: Wallace & Stahl, 2008).

Regardless of what the S&OP process structure is in other respects, it is always based on specific planning phases: sales planning and capacity and resource planning.

The sales plan should include proposed sales-related activity such as campaigns, new-product launches, and product discontinuation, but also factor-in the likely impact of significant changes in markets and customer accounts. In practice it is rarely possible to have detailed and accurate information about external factors, such as changes in customers’ product selection, very far in advance. The further one looks into the future, the less one can be sure, even about the company’s own activities. For example, the times for planned product launches may change in response to the progress of the product development process.

Dealing with unreliable information is the greatest challenge in creating any sales plan. Rules about what should be included in the sales plan, including how unreliable the information and estimates may be, can be arrived at through diligence and persistence; keep refining it until it’s working well.

The capacity plan is created on the basis of the sales plan. In the medium term, the capacity plan can be created through turning the sales plan into a rough production and distribution plan. In longer-term planning, even rougher estimates are used and the sales plan will be compared, for example, to various objectives and capacity limits by product family or product line on a quarterly level.

The greatest challenge in capacity planning is that there are so many kinds of capacity, from production capacity and availability of raw materials to financing and resources for storage and logistics. Bottlenecks or excess capacity may arise in different situations in different parts of the company.

To enable sensible decisions to balance demand and supply, companies should identify where problems may arise, what can be done to achieve balance, and estimate what effect these actions are going to have on sales, capacity, costs, customer satisfaction, and profitability.

Data systems in S&OP process development

The development of an S&OP process is not an IT project. As with all wide-ranging projects that encompass several departments, the greatest challenges relate to the flow of information, to responsibilities and to decision-making. The creation of good S&OP processes require clear ideas of what the goals are, a great deal of change-management, a readiness to learn through experiments and mistakes, and the adaptation of serviceable processes as the prerequisites for operations evolve.

Since the planning of sales and operations is information-intensive, the S&OP process does make demands on your systems. Excel can be used to outline the S&OP process, but this approach is almost always too labour intensive to be an ongoing solution. The vast majority of effort, 90% or more, will go into gathering and organising information leaving little time for analysing plans and finding solutions. In the long run this risks compromising the entire process. Good system support will almost certainly be critical if the whole process is to be carried out smoothly and efficiently.

The following parts of the S&OP process are particularly closely connected to data systems:

  • Efficient and accurate sales planning and forecasting
  • Support for decision-making
  • Monitoring of changes and results

Efficient and accurate sales planning and forecasting

Preparing a sales plan is a stage by stage process. First you need to create a base forecast for all your products. This is pretty straight forward but time consuming. The base forecast is an estimate of sales, including normal variations, seasons and trends but excluding special factors such as promotions etc.

It is often a good idea to create a separate forecast for each customer group. This allows your team to take decisions – such as to institute a customer-specific campaign or change the product selection – on an account-by-account basis – and it makes it easier to assess the likely impact of any such decisions.

If forecasts are made by customer group, the number of forecasts required quickly multiplies. For example let’s take a company that has 500 active products and 10 customer groups needing forecasts. That equals 5,000 forecasts. Now supposing that weekly forecasts are needed 18 months ahead to support planning, that means around 39,000 forecasts that require continuous updating!

Using automatically calculated statistical forecasts as your base forecasts makes the process far more efficient. Computers don’t get tired or bored. This sort of repetitive yet detailed workload is exactly what they were designed to handle; forecasts by the thousand or even by the hundred thousand without sleep, without complaint and with unswerving accuracy and quality. Forecast accuracy also improves because high-quality statistical forecasting often takes seasonal fluctuation and trends into account better and more objectively than humans can. Statistical models or, at the very least, clear reports on the outcomes of earlier campaigns, are also really useful in campaign forecasting.

Figure 3: An example of a statistical forecast plotted against actual sales for a product with considerable seasonal fluctuation.

Our clients have found this works in practice too. One company we work with now generates 95% of its forecasts automatically using statistical methods and says that their accuracy has increased accordingly.

Support for decision-making

As we pointed out earlier, there are many kinds of capacity. Bottlenecks and excess capacity can occur in production, procurement, distribution, and financing. Therefore it’s important to be able to examine forecasts flexibly on various levels.

In the short or medium term, production companies typically create rough production plans to identify production and procurement needs. Similarly, in wholesale and retail, forecasts can be converted into order and distribution plans that can be used as a basis for estimating logistics requirements, capital tied up in stock, etc.

How about the longer term? Well we know that the further we peer into the future the less reliable our ability to predict becomes. However we can improve our long term forecasting by working harder (and smarter) and that means we need to be able to able to dig into our data every which way. Here, a good system that allows completely flexible data analysis becomes really effective.

Think of a forecast like a digital photograph. As you zoom in the clarity of the image relies on the amount of data. If you want to see detail you need quantity of information. Too little information and the image soon dissolve into meaningless blobs. Yet zoom right in and you can’t see the whole picture. You need the ability to zoom out or to change your focus so you can switch between an overview, a partial view or a detailed view.

By the same token, to be most effective, forecasts need to be made on a sufficiently detailed level to enable managers to zoom in on short and medium term changes and zoom out to get an overview.

For example you can look at a given set of forecast data according to predicted volumes by production line in comparison with line-specific production capacity; predicted sales, in Euros (or Sterling or Dollars), by customer group in comparison with sales objectives or budget; and predicted volumes by product family or by packaging type to help determine purchasing requirements.

Figure 4: The information examined in an S&OP process is mainly product-group-, production-line-, and brand-level information (source: Wallace & Stahl, 2008), but closer examination may be necessary during analyses and decision-making.

If bottlenecks are spotted it’s important to be able to look at the forecast in greater detail. For example the risks associated with new products and campaigns are generally higher than with established products so it’s good to be able to separate these out from the full forecast. Also if a particular production line has a capacity bottleneck, it’s important to be able to see which products are planned for production and what their expected volumes are.

One of our clients presents upper-level reports directly from the system during the company’s S&OP meetings and can call up more detailed information, or edit the time period under review in real time and get instant results.

Monitoring of changes and results

Continuous monitoring and improvement is central to the S&OP process’s development.

Sales plans in practice are never exactly the same as sales plans on paper. You simply have to live with a degree of uncertainty. However, it is important to monitor whether there are systemic errors in a plan affecting, for example, a particular customer, and to get to the bottom of any recurrent problems. It is also important to understand which parts of a plan are relatively reliable and which are more prone to errors. When a company is aware of the unreliability of a plan in advance, it can be prepared for issues to arise. For example, one company we work with has contingency plans for both procurement and production for any significant product launch. It produces a forecast based on the most likely result, but it also estimates best case sales volumes and aims to keep the delivery chain sufficiently flexible to respond to higher demand levels.

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Changes made to plans must also be tracked effectively. If a plan goes through significant changes from meeting to meeting, these changes should be monitored and reviewed, with additional scrutiny being applied when new results shed additional light on their impact.

Data as a source of information, information as the basis for decisions

Off-the-shelf S&OP process models are available, but each company needs to find the best way to make use of them. It is important to remember that a plan, however comprehensive, has no value on its own. You will never have perfect information and the S&OP process does not eliminate business risks. However, a good S&OP process does make risk management significantly more effective.

An S&OP process is there to guide business operations and its purpose is to prompt and inform actions. If the process doesn’t lead to decisions, and to better decision making, you’re wasting your time. In setting up the process it is important to focus on those elements that require decisions, on making those decisions within the available time periods, and on the information needed to make them.

The development of an S&OP process is not an IT project, yet data systems must be used in developing the process. Those involved quickly become demotivated if the process becomes bogged down in generating basic data and there’s not enough time left for analysis and decision-making.

Reference: Wallace, Thomas F. and Robert A. Stahl. Sales and Operations Planning, 3rd edition, 2008.

8 Best Practices In Business Process Automation: How To Br >Category: B2B News

Studio Creatio Enterprise: No. 1 In Business Process Management Software

In a business environment, Business Process Automation (BPA) is a proven buzzword that never fails to excite any management team. Establishing plans and bringing about the actual roadmap for automating the business processes is a feel-good thing to do. However, when it comes to actually rolling out the plan across the organization, the “feel-good” factor vanishes and the implementation process becomes a nightmare, conjuring a surreal vision. Once you are convinced that BPA works for you, scroll down for how you could best achieve success in automating many of your existing workflows and processes. The compilation is a product our extensive research on the existing practices in business process automation that have shown results for those who have adopted them in their own industries and organizations.

Those who commit to and execute Business Process Automation will stand to benefit from reduced costs by automating recurring tasks and sending staff elsewhere doing more meaningful jobs. Lowered costs and more efficient operations give them the margins and the agility to meet new business challenges. With well-organized information within easy access, employees will also save a substantial amount of time attending to their jobs. Such operational flexibility lends stability and translates to extending better customer service, which results in loyal customers happy to continue doing business with you.

What are the 8 best practices in business process automation?

Visions and missions are very exciting to be discussed. But the real hitch lies in getting them executed “ successfully. ” Similarly, there are various valid reasons to implement business process automation in your organization , which would ultimately redeem things thereby making the efforts constructive.

On the flip side, automating the business processes would thrive only when it is done in the way it should be. The following are the 8 best practices you should follow, in order to get the most out of your business process automation efforts.

1. Choose the right process

When you decide to automate your business processes, it’s quite natural to want to automate all the processes in a go. Nevertheless, that could be deadly to your automation efforts. During the first time, you’d know very little about automation and how it would resonate with your organization. Hence, “ it is ideal to pick lightweight processes like travel expense approval, reimbursement approval etc. as opposed to mission-critical ones, in order to test the impact of automation, identify the roadblocks and arrive at the potential solutions to dispense with the problems ”. After unveiling the pros and cons of automation, you may gradually automate the mission-critical and customer-centric processes. Another important tip to choose the first process prudently is to avoid picking a process that requires human intervention.

2. Choose the right tool

Any initiative would achieve the desired results, only when the foundation is laid right. For an automation initiative, the kind of tool you choose is pivotal to decide the outcome. The market is teeming with BPM and automation tools, where their representatives tout their product to be the best. However, make sure you opt for the tool that best suits your organizational needs in terms of scalability, level of capabilities, the types of users(technical or non-technical). For instance, some tools are designed to offer application development capabilities while some are built for transparency and process tracking. Also, “it is essential to choose an easy-to-use software which non-technical business users can easily adopt without having to depend on expensive consultants.”

3. Define specific automation goals to measure the ROI

Most organizations implement automation, reckon with that and then contemplate over the goals. Essentially, “ the first step towards automation is to define its goals and then work backward to achieve the same ”. Automation involves substantial investment of time and money. Therefore, it’s critical to gauge the performance and ensure at every step, that the results are worth the investment. If things fall through the cracks, it’d be attributed to an imprudent expenditure. This is why automation should follow a phased approach so that they can pull the plug while still involving limited investment if things do not go as expected. This way it also protects the organizations from ‘big plunge’ investment that would not work at all.

4. Ensure clear establishment of roles and hierarchy

“Once automation falls in place, consequently, there will be lots of changes in the roles of people. If it is not made clear to them, hassles like buck-passing, scapegoating, deflection etc. crop up” . To avert them, it’s important to establish the roles and responsibilities of every stakeholder involved in the process. Besides, it is also essential to set up a transparent hierarchy by identifying the process owner in order to enforce accountability within the process. To achieve this level of professional integrity, you should choose a human-centric solution , which the business leaders will feel comfortable with. Also, make sure you sit with them, elicit their current way of handling the process and align the automated process with the existing strategy. The strategic alignment plays a vital role because that is found to be the single most point of failure, in a BPM initiative.

5. Involve everyone in the process

Automation is a drastic change introduced to the organization and hence will bring up active and passive resistance from the employees. As a result, there are all contingencies that your automation efforts go futile. Besides, it also deters them from embracing the change introduced by the management. “ In order to encourage full-fledged involvement of the stakeholders in the adoption and evangelization of the new platform, keep every stakeholder on the same page and involve them right from the early stages ”. Conduct a brainstorming session to understand the pain points so that everybody feels important in the organization. This way it also becomes easy to leverage automation to solve all the problems.

6. Train the users

“The real success of automation depends on how well the new platform is being embraced by the lot and how well they interact with the system”. Business process automation is essentially to enforce accountability on the process owners for the process to run smoothly. However, it is important to coach every staff such that they become well-versed with the new tool. Also, educate them about the fundamentals of the platform, the rationale behind the implementation of automation and the desired outcome. But, for the users to get acclimated to the new platform, it is critical to choose a software that is intuitive and easy-to-use and that which fosters self-learning. This way your users do not have to undergo numerous learning sessions to understand the working of the platform.

7. Focus on continuous improvement

“Automation is not a one-time process but an ongoing one” . Without continuous monitoring of the results that automation brings to your organization, it’s impossible to improve the efficiency of the process. It is the responsibility of the process owner to persistently gauge the performance of automation and make continuous amendments to get the best out of it. Usually, it is difficult to measure the process because their data is more vague. But if you determine what specific types of data you want to look at, you can use key performance indicators (KPIs) to break them down and make continuous improvements. The “Monitor and Optimize” approach is pivotal to the success of your BPM implementation. Overlooking it may leave your BPM system ineffective over a period of time.

8. Always have a backup plan

“While process automation technology is great, it doesn’t mean it’s impeccable.” There would be times where there would be a technical glitch, when your system would not be able to help you. But, that cannot put your day on hold and your processes cannot stop. This is when you would need to have a failover option to fall back upon. At such times, you would need human intervention to handle the processes manually. All automated business processes should contain such provisions so that they aren’t at stake. Sometimes machines do fail as well. Hence, it would not be ideal to rely solely on the systems just because you have made considerable investment on that. This is another important point to reinforce the fact that you need to choose a human-centric BPM.

BPM is not a “one and done” process. You need to take multiple factors into account to accomplish the mission. Any initiative will thrive only if you follow all the conventions associated with that. If you do it haphazardly, it’d complicate the situation further and defeat the whole purpose of implementing the BPM system. Hence, while contemplating the implementation of BPM to solve your business problems, make sure you painstakingly follow the abovementioned best practices so that you reap the fruits of your investment and bridge the gap to make your process automation efforts a colossal success.


This quick survey of the leading best practices in business process automation should give you a good idea how to go about implementing a similar program plan for your business. To proceed further, you will need to have a shortlist of the leading business automation applications on the market, to flesh out a good candidate. When you look over the list, pay attention to those that offer a free trial, which should give you a fundamental path to have a good feel of the software in terms of your employees who are going to use them.

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