The future is much like an ocean. It’s constantly shifting. And while the right preparation can help you better navigate it, its uncertainty can quickly and rather mercilessly wreck even the best-made plans.
Idaho Forest Group, LLC (IFG) knew that it needed to better address this uncertain future, so it hired Dan Redmond to serve as the company’s new Director of Financial Planning and Analysis.
“Before I was brought on,” he explains, “IFG had never actually done a forecast before. All they did was match budgets to actuals at the end of the month and then add in personal experience and gut instinct to make decisions. So they didn’t know what their future cash flow would be. And that left them vulnerable and scrambling if there was a problem at one of the mills or if prices were down.”
At the time when Redmond joined, IFG was experiencing unprecedented swings in the market due to the pandemic’s impact. Meanwhile, the firm was working to update and upgrade one of its sawmills, tying up some of its cash reserves for that project.
Beyond the financial challenges, the firm’s planning inefficiencies were beginning to also disrupt its day-to-day operations, resulting in longer lead times for product delivery and occasional raw material shortages.
“In general, I like to be efficient and make my life easier,” adds Redmond. “I’d rather focus on the analytics and their review than having to spend all my time putting together a forecast. But we were doing everything in Excel spreadsheets. I was spending 80 hours every month on just this one task.”
He continues: “Excel is obviously not the ideal tool for this—particularly as the models became larger. I was planning across multiple mills and corporate sites, and the data I was looking at was rife with errors. Having worked with a planning tool at my last company, I knew that there was technology out there that could help.”
Frees up around 25% of an executive’s schedule by cutting forecasting efforts from over 80 hours to under 15
Uses process automation to net a 25% time savings across the entire finance department
Redmond and IFG quickly found that help with IBM Business Partner ActionKPI and its Integrated Profitability Solution, powered by IBM® Planning Analytics technology. The new software allows IFG to centralize all of its balance sheet, income statement and cashflow reporting data, helping to simplify forecasting efforts.
“As I see it,” notes Lance Tylor, Chief Executive Officer at ActionKPI, “Planning Analytics is the next step of evolution from Excel, and I personally think it’s one of the best products on the market. And we’ve been able to take that base and make it more functional.”
With the Integrated Profitability Solution in place, IFG staff can now maintain a rolling 24-month forecast that is constantly updated with product, pricing, sales and inventory data. At the same time, mill supervisors can generate daily forecasts to better prioritize cut schedules and balance workloads throughout the given week or month.
“The ActionKPI team linked up everything within IPS,” explains Redmond. “So now we can look at revenue to date. We can look at the sales composition, the sales volumes/MBF [1,000 board feet] by mill. We can drill down to customers. We can look at the log deliveries and what the prices are and break out the different components of those log deliveries. We can even look at the production data live and match that against our forecasts.”
To help simplify the licensing surrounding the underlying Planning Analytics software, ActionKPI delivers its Integrated Profitability Solution under an IBM Embedded Solution Agreement. And the IBM technology, in turn, provides the heart of the solution, handling the complex analysis and calculations used to build forecasts. Of course, ActionKPI has enhanced the software to drive further value.
“IPS is more of a framework than just a product,” explains Tylor. “There are process changes. There are pre-built data integrations. There are methodologies that we deploy around change management and adoption. Then we wrap support service around it—a portal, a help desk—so we can help resolve any challenges with the models that have been developed. It’s a total package.”
“For forecasting, we now have our mill supervisors go into the production planning sheet that ActionKPI built,” Redmond explains. “And they can change the hours and the species and the cuts to build a daily production plan that is fed directly into the forecast queue. We can then see these planned levels in the sales module and identify the production dollar value by species, by month and by mill.”
“We can factor in everything,” he continues. “We can forecast utilities, forecast CapEx. We can forecast the cost for headcount for a particular mill or department. And we can bundle all of that into various reports and monitor it through custom dashboards. We’re no longer crunching numbers. Instead we just refresh the system, take a screenshot and drop it into a PowerPoint. And then we send those to the owner and the board for review.”
Alongside its forecasting capabilities, the Integrated Profitability Solution also helps with inventory management.
“In the forestry business, inventory balances are always complicated,” notes Redmond. “During the spring, when the snow starts to melt, it’s very difficult to get logs out because of road conditions. We typically have to survive off the logs that we have in current inventory. So being able to keep an eye on what the current levels are across the company means we’re not going to run out of lumber or a specific species.”
And the functionality of the platform doesn’t stop there. As Redmond explains: “The last forecasting tool I used didn’t offer a comments feature. But with IPS, we’ve had comments available since day one, which is very useful. Sometimes you’re looking at a forecast, and there’s an item that you originally put in two months ago, and what you were doing two months ago is tough to remember. But then you see the comment, and it all makes sense.”
Taking advantage of the ActionKPI solution, powered by IBM Planning Analytics software, IFG dramatically accelerated the timing of its forecasting and reporting efforts. On average, the company’s financial department netted a 25% time savings across operations thanks to process automation.
“I personally was spending around 80 hours each month juggling spreadsheets to create our forecasts,” notes Redmond. “Now I’m spending only 10 to 15 hours on the same task. It’s literally freed up around 25% of my time. In addition, our FP&A [financial planning and analysis] team is operating much leaner. We can support the business and handle even more requests for analysis without having to add headcount.”
“We helped them eliminate a lot of the spreadsheets they were using by bringing everything into Planning Analytics,” adds Tylor. “It’s pulling information from six different systems, so we’re creating a small data warehouse with built-in reporting and interfaces that make it user friendly. It’s essentially a single source of truth for company-wide planning and analysis.”
And with a more comprehensive, intuitive tool at its disposal, IFG reduced its annual budget cycle from roughly three months to only a couple of weeks. The solution also helps to reduce stress levels for accounting personnel as they can now answer questions from the Chief Financial Officer and owner within minutes, avoiding the time-consuming research needed in the past.
Further, the return on investment (ROI) of the Integrated Profitability Solution was very attractive. As Redmond notes, “You look at the cost of IPS compared to the cost of a general ledger system, and you get so much more value out of ActionKPI—especially around the report building and analysis.”
He concludes, stating: “With IPS, we now have a completely emotionless forecast. And working with ActionKPI it’s only going to be more accurate in the future. It’s also a major comfort to have such a big name like IBM running in the back end.”
Headquartered in Coeur d’Alene, Idaho, IFG (link resides outside of ibm.com) is one of the largest lumber producers in the US, manufacturing nearly two billion board feet each year. Altogether, the business operates seven sawmills and a lone finger-joint mill where it produces wood of various sizes and grades from ten different species of tree.
About ActionKPI
IBM Business Partner ActionKPI (link resides outside of ibm.com) is a management consulting firm that specializes in bringing performance management, analytics and increased profitability to finance departments. Headquartered in Calgary, Alberta, the business also maintains an office in Dover, Delaware.
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