Welcome to LTP - Advanced Analytics & Business Consultancy

Jul 29, 2022

Crafting an annual budget is a headache. The most common approach is to look at last year’s figures and add or subtract a percentage to obtain the following year’s budget. If this is your scenario, we can tell you that you’re not alone.

It is a heavy process that will likely perpetuate inefficiencies, does not question status quo, and might give way to some nasty surprises. You won’t be able to understand how the expected activity influences every cost rubric. Imagine your product portfolio will extend by 10%. Or imagine you conducted an operations project, and your efficiency is now 5% higher. Are you able to foresee the impact of such levers on the budget?

Well, the good news is: there is a solution.

An optimization model coupled with machine learning that points you towards the most profitable decisions, either by helping you to fulfill customers’ demand in full, supporting revenue generation, or indicating how to trim the fat from your budget.

Curious? We can explain.

The first step is to systematize corporate data, such as sales plans, and characterize your production and supply chain assets.

Load the input into a web platform that will provide you with a zero-based operations plan in terms of human and machine resources, stock, and other operational rubrics. Afterwards, you should convert the projected activity into a budget by applying the most accurate cost drivers. You can then compare the costs plan with the previous budget and past activity, and analyze every cost rubric in detail.

At this point, you can conduct different what-if scenarios and see what happens if you change the product portfolio, increase sales volume or adapt your production strategy and capacity. A different scenario is generated in just a few minutes! Choose the best scenario, and you’re ready to export the final budget.

With this model, you can also revise and adjust your budget throughout the year and leverage the integration of different teams.

It’s a quick and agile process that allows a precise and granular budget planning, taking advantage of customizable what-if scenario generation leveraged by state-of-the-art optimization techniques!

Ready to plan your annual budget? Partner with us!

By: Daniel Pereira , Bruno Batista , Pedro Schuller

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