The Periodic Planning Process

Retail management needs to know how the company is performing against the company's budget. To make this comparision, the retailer creates a periodic plan on a monthly or quarterly interval. The periodic plan is an update to the budget during the current fiscal year. The periodic plan can be based on:

• a comparison of this year’s actuals to date against the corresponding time period in last year’s actuals
• a comparison of this year’s actuals to date against the corresponding time period in this year’s budget
• the application of user-defined growth percentages to last year’s actuals

Managers use both the budget and this updated plan to make staffing and scheduling decisions. Many retailers want the periodic plan to extend into Q1 of the following year.

Finance, merchandising, and store operations (including store managers, district managers, regional managers, and divisional vice-presidents) often use the solicitation process to provide input into the periodic plan, as they do for a budget.

Depending on how this periodic plan is created, the periodic plan is either a top-down forecast, or a bottom-up projection.

Both types of periodic plans track a company’s progress-to-budget status. The status helps the company to predict likely business results by applying a forecasting algorithm to actual historical values.

Throughout the year (usually monthly or quarterly), the plan is updated using more current data, such as sales and AHR actuals to date. Sales and AHR are forecasted; the other data is taken from the budget or is calculated. These updates enable managers to gauge how they are tracking against the budget throughout the year. Managers use both the periodic forecasts and the budget to decide how to allocate the labor budget.