Rolling Forecast – The Maersk Group Case Study
As a part of The London FP&A Board(1) meeting in May 2016 to discuss the pros and cons of rolling forecasts and how best to introduce them, there were plenty of lessons to be learned from the Maersk Group case study. In his presentation Matthijs Schot, head of performance & analysis at AP Moller Maersk stated:
“We’ve abolished the annual budget completely and only use rolling forecasting now. People within the organisation …, have to get used to the fact that they’ve not got a single hard and fast number for the year anymore. They need to accept that numbers – across revenue expectations, strategic investments and targets – change…”
Maersk Group runs a rolling forecast every quarter and now operates five quarters in advance. It still runs variance analysis and does comparative modelling and benchmarking versus competitors and the shipping industry as a whole to “check our people and business units are doing well”, as Schot told the FP&A Board.
“Keep it simple,” advised Schot, “as it makes it easier to align strategy and target setting with financial planning. Sometimes the more you put into a forecast the worse it can be, so simplicity should be paramount. You make the odd mistake but these can be corrected as you go along because control over the business increases with a rolling forecast.”
Read more: Advantages of rolling Forecasts
(1) London FP&A Board is a collection of senior financial planning & analysis experts, with hundreds of years of experience collectively between them. Its intention is to support the best practices and to communicate latest trends in Financial Planning and Analysis. If you have not heard of the London FP&A Board before then you may wish to acquaint yourself with their mission and principles via their website. Read the full article on the FP&A board website
