Why is Anaplan doing so well in the FMCG industry
Anaplan has been gaining huge traction in the Fast Moving Consumer Goods(FMCG/CPG) industry and I thought it would be useful to look at a few reasons why Anaplan fits so nicely in this space. Over the past 5 years we’ve seen global enterprises such as Reckitt Benckiser, Kimberley Clark, P&G & Diageo join the Anaplan revolution, but it’s also worth noting that mid-market companies such as Highland Spring have also adopted the platform as they often have a similar type problem to solve, albeit perhaps on a somewhat smaller scale. We also see quite a lot of similarities between our FMCG clients with similar industries such as Distribution or Pharmaceuticals.
So why have all of these companies chosen Anaplan as their modelling platform of choice? What makes them choose Anaplan over some of the traditional modelling solutions of SAP/Oracle or even bespoke FMCG focused systems. Having been involved on quite a number of the clients currently using Anaplan in these industries both from the sales and project delivery side of things I think I’m pretty well placed to offer an opinion. This is not a sales pitch, rather a summation of my experience in the industry and where I’ve seen the benefits.
There comes a point of realisation across a lot of companies where Excel hits it’s natural limitations, mainly from a scalability point of view and this is particularly prevalent across the FMCG companies given the large quantities of SKU’s & Customers they deal with. This will generally be to do with the combination of multiple dimensions. For example, Excel can probably handle a Customer by week forecast, however as soon as I want to go to the combination of Customer & SKU by week it will inevitably run aground, particularly if I start to talk about what if analysis.
Anaplan has a lot to offer now in terms of statistical forecasting and modelling capabilities, but interestingly enough a lot of the projects we run are relatively simple calculations just carried out across huge datasets. I recently spec’d an Anaplan implementation to forecast weekly sales by 24,000 SKUs across 100,000 customers by day. Needless to say, they hadn’t been doing that in Excel!
A Platform Approach
Generally what you find with bespoke systems, or indeed the legacy modelling platforms, is they specialise in very specific areas of the business. For example, there are many bespoke systems which handle Trade Promotion Planning, but very few which can handle a broad set of Trade Promotion Planning, Supply Chain and Cashflow Modelling. So this leads to many disparate tool sets, and many differing skillsets required across various areas of the business.
Anaplan is a cross industry, cross business function modelling tool and with the wide variety of use cases required in an FMCG company it fits really well. It can handle all of the different use cases on a single platform with a single skill set and user experience e.g. Demand Forecasting, Supply Forecasting, Capacity Planning, Shunt & Storage Costing, Traditional FP&A, Trade Promotion Planning and so on. I’ve literally lost count of the various use cases I’ve implemented Anaplan for and in fact I believe Anaplan is breaking down barriers between the different areas of business planning and finally enabling a truly wholesome integrated plan.
I think companies in this industry are crying out for a single modelling platform where they can ask any sensible question and get an instant answer. It’s amazing how long it can take to answer a “sensible” questions using many disparate tool sets.
Following on from the point above and aside from the scalability piece the single most key advantage I see clients in these industries gain is the collaborative environment it enables. It never ceases to amaze me, the number of different silo plans that happen within a company, and this is particularly prevalent in the FMCG industry given the complexity and variety of the business.
For example, Finance are using a Sales Forecast to drive a P&L, BS and CF model which is approved by the banks or indeed the stock market. But this Sales Forecast has no connection to the Production Forecast which is produced on a daily basis, or if it is, it is such an outdated version that it is rendered useless. And the Shunt & Storage Cost Model bares very little connection with the daily moving Production Forecast as it takes days to update the model with a new version of the Production Forecast.
This is not an uncommon scenario and I see it played out time and time again. It’s very much linked to the disparate platform approach I discussed above as generally each area of the business will be using their own systems and the integration between them is manual or non-existent. Or indeed both areas will be using a cumbersome Excel solution which is a collection of spreadsheets taking hours (if not days) to update never mind to calculate.
This is not the way business planning should be and Anaplan addresses this point beautifully. I have built a model for one of my clients which allows a sales person to input an updated Sales Forecast which will immediately drive revenue through a P&L, BS & CF model but also drive a Production Forecast based on a daily sales method, even taking into account production line maintenance. It will also drive through a Bill of Materials calculation down to a Raw Material SKU level allowing a clear view for Sourcing and also allowing what if analysis on raw material pricing.
At the same time this Sales Forecast is driving through a Storage & Shunt Cost Model which is optimising warehouse storage and calculating the appropriate shunt costs. This all happens within a second of the sales person updating their Sales Forecast. And this is not a small model – over 1.5 billion data points taking up 15GBs of workspace.
Ok so we’ve built in some workflow controls to make sure nothing is corrupted with silly inputs, but the model is live and connected and should the workflow control allow it the numbers will flow through in an instant. Having been involved in many sales hot houses throughout the years, and also having evaluated quite a lot of tools myself I don’t believe there is anything else on the market that would allow this type of instant collaboration across function and is a key reason why Anaplan is flourishing in the FMCG industry.