In manufacturing, spreadsheets have traditionally played a significant and valuable role for finance teams. In particular, they are useful for ad hoc analysis and reporting. However, in our experience, many FP&A teams spend 80% of their time populating and validating spreadsheet data, leaving 20% of the time for analysis and proactive decision making. In a dynamic manufacturing marketplace with tight margins and constant change, this becomes a major problem. The lack of focus on analysis results in an inability to actively manage the business based upon the key factors that impact production, resource utilization, and profitability.
Dimensionality is another concern – manufacturing typically involves multidimensional modeling and planning. Examples of dimensions include departments, locations, products/product lines, and customers. As a result, manufacturers of any size and complexity can quickly exceed the capabilities of Excel. Linked worksheets, formula errors and versioning all weigh down the ability to quickly update plans and explore “what if” scenarios. In some cases, spreadsheets need to be re-built to accommodate changes.
In the case of budgeting with spreadsheets, up to 64% of annual plans are out of date before even being put into effect. That’s a pretty scary statistic and one that resonates among my colleagues in manufacturing FP&A.
Thankfully, there is a better way. While many in finance tend to want to stick with what they know, using the wrong tool for the job doesn’t serve anyone’s purpose. Outstanding spreadsheet skills do not necessarily translate into added value for the organization. Rather, understanding the dynamics of your business and using the proper tools for planning and analysis help make your team more productive with greater benefit to your organization.
Cloud solutions continue to have a game-changing impact not only in areas such as CRM, ERP, MRP, and SCM but also in the realm of Corporate Performance Management. One solution in particular, Adaptive Insights, has proven to be a great fit for manufacturing. With Adaptive Insights, we build integrated models that include the following:
- Revenue Forecasting
- Cost of Goods Sold
- Margin Analysis
- Plant/Department Cost Breakdowns
- Bill of Materials
- Overhead Allocations
- “What if” Scenario Analysis
- Multiple Currencies
- Capital Budgeting
- Debt Schedule Projections
- Financial & Operational Ratio Analysis
- KPI’s & Dashboards
With our easy-to-use DataBlend cloud integration solution, we connect Adaptive with other core systems so that FP&A, the CFO and other key staff have real-time access to the data and reports that improve decision-making. With driver-based budgeting and rolling forecasts, you are always able to keep your plans up-to-date. Because Adaptive Insights is accessible 24x7 via web browser, you are able to facilitate better collaboration among budget stakeholders with everyone working from the same version of the truth. What you will experience with Adaptive Insights is the following:
- Improved business flexibility and scalability
- Elimination of data silos and islands of knowledge
- Continuous innovation
- Lower total cost of ownership
- Ability to free up IT resources
- Improved data and information security
If you are interested in getting off spreadsheets for your critical FP&A functions and moving to the cloud, just request a demo and we’ll show you how you can transform finance in your organization.
About the Author: Kevin O'Brien is Vice President of the Central Region at Carlson Management Consulting. He offers a strategic, facilitated project management approach resulting in successful implementations of Corporate Performance Management solutions to our manufacturing clients. He is a Certified Public Accountant in the State of Ohio and is Adaptive Insights Certified.