The Logistics operation of an International Consumer Products manufacturing company wished to justify a new forecasting process. However they were unable to commit to financial benefits in terms of reduced current assets (stock holding) since many other factors could impact on those benefits.

The Director requested assistance to create a proposal which would ensure that the project was approved without committing to specific financial benefits.

I reviewed the Change proposal and established the expected, quantifiable (non-financial) outcomes. Clearly the most significant of these was improvements in forecast accuracy.
I then worked with the Finance team to understand the financial consequences of different degrees of improvements in forecast accuracy, with a base assumption that all other variables would remain unchanged.
The proposal taken to the Capital Approvals Board made a specific, numeric commitment in terms of forecast accuracy improvement, and a provisional estimate of the financial benefit arising. In addition a commitment was made to provide monthly updates on forecast accuracy and the budget items expected to benefit from the change.

The project was approved. Following implementation it exceeded expectations in terms of forecast accuracy, and the provisional financial benefits were in fact also achieved.
In addition the process used here for project approval was adopted for other projects where for any reason the financial benefits could not be committed formally.

The Logistics function derived value from this approach as follows:
– Improved understanding of the nature of the benefits to the Business of this (& subsequently other) change projects
– Better able to demonstrate the benefits realised from change projects and the ROI, leading to improved credibility with and confidence from across the business
– Better understanding of how change projects support the Business Strategy
– Greater acceptance of change, leading to quicker delivery
– Better, more objective approach to project prioritisation.