Reebok 2015 Annual Report Download - page 110

GROUP MANAGEMENT REPORT – FINANCIAL REVIEW
Internal Group Management System
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STRUCTURED PERFORMANCE MEASUREMENTSYSTEM
We have developed an extensive performance measurement system, which utilises a variety of tools
to measure the performance of the adidas Group. The Group’s key performance indicators as well as
other important financial metrics are monitored and compared against initial targets as well as rolling
forecasts on a monthly basis. When negative deviations exist between actual and target numbers, we
perform a detailed analysis to identify and address the cause. If necessary, action plans are implemented
to optimise the development of the Group’s operating performance. To assess current sales and profitability
development, Management continuously analyses the performance of our operating segments. We also
benchmark the Group’s financial results with those of our major competitors on a regular basis.
Taking into account year-to-date performance as well as opportunities and risks, the Group’s full year
financial performance is forecasted four times a year. In this respect, also backlogs, sell-through data,
feedback from customers and own-retail stores are assessed as available. Finally, as a further early
indicator for future performance, the results of any relevant recent market and consumer research are
assessed as available.
ENHANCED INTEGRATED BUSINESS PLANNINGAND MANAGEMENTAPPROACH
In order to further optimise profitability and working capital efficiency as well as operating cash flow
development, we continue to drive the Group-wide Integrated Business Planning initiative (IBP). This
initiative focuses on developing and forming an enhanced forecasting approach by aligning processes and
timelines of major business functions such as marketing, sales and operations at a market and global
level. The centre-point of this approach is to improve the reliability of future business planning, leading to
a new efficiency level of order book building and conversion. This, in turn, is expected to lead to improving
full-margin business.
The whole process is set up in a rhythm and timeframe to facilitate full cross-functional alignment and
forecasting clarity in advance of important business decision processes – in particular those related to
product pricing, range building, material purchasing or production capacity fixing. To create a seamless flow
between achieving our strategic objectives and implementing operational plans, we follow a rolling two-year
time horizon. This ensures more focus on the mid-term perspective, while at the same time highlighting
relevant information around short-term business events and volatilities. All target-setting is fully embedded
into the integrated planning process and communicated in advance of all relevant business milestones.
see Glossary, p. 260