From Technology-Led to Outcome-Led: How PMI Is Redesigning Planning Around the Business

Planning transformations are often introduced as technology programs.

Philip Morris International took a different approach.

As the company’s portfolio expanded and its smoke-free business grew, PMI found that the way it had operated for decades needed to change with it. The business had become broader, faster-moving, and more complex, while planning processes still reflected a more traditional model.

For Ankur Gupta, Director Operations Strategy, and Bhagawan Rakesh, IT Director, Supply Chain at PMI, that created a clear starting point.

“Transformation doesn’t happen based on technology,” Gupta said at aim10x Europe. “Very often there is a desire to call it a technology transformation, which we all know it’s not.”

PMI calls its approach “right to left”: begin with the outcomes the business wants to achieve, then work backwards through process, operating model, data, and technology.

Starting with the outcome

The first step was to set the ambition.

PMI defined the business outcomes it wanted from the transformation and attached specific KPIs to them. These covered the financial impact as well as the operational measures that would indicate whether the new model was actually working.

The targets were deliberately ambitious.

“Unless those numbers look scary, the numbers are not worth it,” Gupta said.

One example was planning speed.

PMI’s integrated planning cycle could take around five weeks. The target was to reduce that to one week across the enterprise.

The company also set goals around forecast accuracy, waste, write-offs, air freight, and other operational measures.

The broader ambition was equally important. PMI operates across more than 180 markets and wanted the organization to work from a more consistent planning model.

“We said the whole company will operate in one way,” Gupta said. “We’ll have one explainable number that we are all going to go with.”

Treating planning as an enterprise transformation

Once the targets were defined, PMI worked backwards to understand what would need to change to achieve them.

That meant looking beyond supply chain.

Commercial, finance, markets, regions, factories, and suppliers all had to be part of the transformation.

“We cannot do it ourselves,” Gupta said. “We need our partners in commercial. We need our partners in finance. We need the markets involved. We need the regions involved. We need the factories involved.”

The planning model therefore spans revenue growth management, demand, IBP, supply, inventory, material requirements, and the wider supplier network.

PMI wants those processes to work as one connected system rather than as a series of functional handovers.

That end-to-end view runs from consumer and commercial decisions through demand and supply, all the way to Tier 1, Tier 2, and Tier 3 suppliers.

Moving away from sequential decision-making

One of the biggest sources of delay was the way decisions traveled through the organization.

A change in market demand could trigger a sequence of analysis across demand planning, supply planning, manufacturing, and material planning.

Each team performed its part before passing the question to the next.

Even relatively small decisions could take weeks.

PMI wants to reduce that latency by moving toward a more autonomous model.

“We decided we are going to move to a mainly autonomous system,” Gupta said. “Humans will only make exceptional decisions.”

That requires more than automating the existing process.

PMI is also redesigning the roles, organizational structures, and decision rights around planning.

Gupta describes this as a “decision architecture-led operating model.”

The principle is that the operating model should reflect how decisions need to be made in the future, rather than preserving the structures built around yesterday’s processes.

Changing the role of IBP

The transformation is also changing how PMI thinks about Integrated Business Planning.

Historically, IBP processes often revolve around reaching consensus on a number.

PMI wants to separate the forecast from the financial target.

“Forecast will be wrong,” Gupta said.

Instead of adjusting the forecast until it aligns with the target, PMI wants a genuine bottom-up view of expected demand. IBP can then focus on the gap between that forecast and the company’s financial ambitions.

The discussion becomes more focused: what actions can close the gap?

“IBP transforms from a consensus-based discussion amongst many, many teams to a very focused conversation about how do we close the gap between a forecast, which is a true bottom-up forecast, to my financial target,” Gupta said.

Connecting demand to the electronics supplier network

PMI has already applied this model to its electronics category.

Using o9, the company connected demand across more than 100 markets with approximately 10 electronic manufacturing suppliers and around 50 Tier 2 suppliers.

That provides visibility across a network PMI does not fully own.

The company can now assess how changes in demand affect supply and identify material constraints further upstream.

If a shortage appears at an electronic manufacturing supplier or Tier 2 supplier, planners can evaluate options such as moving materials between suppliers.

“We connected the demand for 100-plus markets, the electronic manufacturing suppliers, which is around 10, and then we also connected to the 50-odd Tier 2 suppliers’ information,” Rakesh said.

This gives PMI a much clearer picture of supply risk across the electronics network.

Responding faster when disruption hits

That connected model has already been tested by real disruption.

When one of PMI’s electronic manufacturing suppliers experienced a cyberattack, the company used scenario planning in o9 to evaluate how capacity could be shifted elsewhere.

PMI was able to move capacity to other suppliers while continuing to meet demand.

“We were able to quickly shift the capacity to other EMS and still meet our demand,” Rakesh said.

The company has also introduced optimization capabilities to help manage excess materials and inventory exposure.

If materials are already committed within the supplier network, PMI can evaluate which finished goods should be produced and where demand can potentially be influenced to reduce write-offs.

Decisions such as postponing purchase orders, moving materials between suppliers, or canceling orders can also flow through the supplier collaboration process.

Once approved, some actions can be automated.

Reducing analysis and improving visibility

The changes are also reducing the effort required to make decisions.

Previously, visibility into inventory at Tier 1 and Tier 2 suppliers often depended on emails and calls.

That information is now available directly within the planning environment.

Rakesh said the time spent on analysis and decision-making around changes has been reduced significantly.

“Approximately 45% of time spent on analysis or even a decision to be taken for any change today has been drastically reduced,” he said.

The electronics category is now serving as a foundation for the broader transformation.

PMI plans to extend the approach across more categories over the coming years.

Redesigning the operating model for AI

For Gupta and Rakesh, one of the most important lessons is particularly relevant as companies increase their focus on AI.

Technology should not define the transformation.

“Stay away from naming the technology,” Gupta advised. “Name the business outcomes that you want.”

From there, organizations can work backwards.

Which processes need to change? Which decisions should be automated? Which roles will remain? Where should decision rights sit? What capabilities will teams need?

These questions become more important as AI changes what can be automated.

PMI expects future roles, team structures, and ways of working to look very different from those used today.

“The operating model is exactly how the work gets done on a day-to-day basis,” Gupta said. “The team structures, the roles, the capabilities we need in the future, the decisions that will be made in the future, they will look extremely different to how we operate the business now.”

That is ultimately what “right to left” means for PMI.

Start with the outcome. Define how decisions need to work. Redesign the process and organization around them. Then use technology to make that model possible.

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