A U.S. based manufacturing company is heavily leveraging Excel to complete their budget process across multiple cost centers, lines of business and product lines. The accounting group prepares many spreadsheets in advance of the process to provide current year actuals and prior year budget values as guidance in the budget process. Various managers are requested to review and budget at the individual cost center and general ledger account level. The current process spans multiple months. Given the timeline the product sales numbers are updated and require “rebudgeting” by the sales team, logistics and supplies. The process is laborious and due to the many spreadsheets difficult to maintain.
We assisted the company with assessing their current process, to assist in the selection of a robust budgeting tool, and design of the future process. Our goal was to significantly reduce the budget process and to implement a sustainable forecasting model. We focused on the primary areas of the budgeting process: accounting, sales, marketing, supply chain, logistics, chemical and packaging.
We brought together a team of those involved in the processes beginning to end, to better understand dataflow, bottle necks, gaps and ultimately inefficiencies. When reviewing your processes as part of a needs assessment it’s important to take into account not only the current state but the company’s long term strategy.
- Do you anticipate a lot of growth or reduction in the organization?
- Will you add offshore facilities?
- Major changes in the products or lines of business that will impact the way in which you budget?
- Will you change your ERP or other systems that will impact this solution?
It is easy to be stuck in them “way we’ve always done it,” having an external resource or even someone from a different department or line of business to challenge assumptions and ask ,“why?” is very helpful. Often while explaining the reason to a new person a better solution can be found.
Once the processes were defined in current and anticipated state we were able to define some minimum software requirements:
- Ability to set global, regional and product line, “factors,” to increase the values or “constraints.”
- Ability to have multiple unit types and complex formulas/logic
- Retain budget and forecast versions
- “What if,” analysis
- Workflows to automate reminders/notifications
- ERP Integration
- Enhanced reporting capabilities
By defining the required data elements, minimum requirements, required reports and owners we were able to create an RFP that was easily approved by the management team. In this case, creating process flows that detailed the process and data development was helpful in confirming that all elements were included in the analysis.
In part two of this series, I will address the software selection process. In the meantime, to learn more about how RSM can assist you with your other business needs, contact RSM’s management consulting professionals at 800.274.3978 or email us.