In The New Economy, Budgeting Is a Continuous Process

Today's economy goes beyond Excel's ability to provide a nimble, efficient and effective way to react to the velocity of change in budgeting and planning for the retail industry.

 

Retail is, and always has been, about getting it right the first time: the right products, in the right quantities, in the right season, at the right locations and sold at the right prices.  Unfortunately what is "right" changes, and faster than ever in today's global economy and diverse sales channels.  Retailers know well that yesterday's top-selling item is today's overstock in inventory.  Profitability also depends on getting all of these "rights" aligned and planning is key to that alignment. 

Host CPM enables retailers to optimize planning, budgeting and forecasting and to manage all aspects of organizational performance.  Key benefits include:

The objective of Host CPM Suite is to help retailers:

• Efficiently manage store performance by creating a standard store scorecard that can be applied to each store and region.
• Allow individual departments like store operations, merchandisers and distribution focus on their key metrics with their unique scorecard while executives can see a 360 degree view of the company.
• Optimize financial and operational performance through the process of:
  • Setting store standards for both costs and operations
  • Benchmarking against those standards
  • Updating the standards as appropriate for actual results
  • Making decisions about the future based on the benchmarks

To create a continuous improvement environment.

• Drive their planning process from Top Down Imperatives to create detail store targets and allow store managers to "make the plan real" by updating the plan and documenting the assumptions that support the changes to the top down plan.  The diagram below identifies the process.

 

The process for creating and merging top down corporate plans with bottom up store budgets include:

• Step 1:  Start with initial assumptions about future store performance based on key drivers at the corporate, region and store location.  Convert those assumptions to Host Business Rules, process the business rules to create detail store targets.  Iterate through running reports on top down plan, modifying the assumptions and rerun the rules until the desired detail targets are achieved.  The top three diagrams (Assumptions, Business Rules and Detail Store Targets) define the process from a Corporate Store Operations perspective.
• Step 2:  Copy the "Detail Store Targets" to the "Bottom Up" plan.  The "Detail Store Targets" are not touched and become a benchmark for measuring against the "Store Bottom Up" plans.
• Step 3:  Let the store manager and store department managers edit the bottom up plan and "make it real".  Their input is accomplished through an Excel like interface in the browser.  Require them to enter "Notes" on any significant variances they are proposing.  Also allow them to enter any special projects like Store remodels or merchandising resets through Host's discretionary initiatives module.  The bottom three boxes (Prior Year History, Budget Templates and Special Projects and Bottom Up Plan) describe the budget/planning process from a store or department perspective.
• Step 4:  Use reporting and ad hoc analysis to compare the original top down plan to the bottom up store plan and analyze variances.