ProphixIntegrated financial planning allows an organization’s finance function to facilitate important conversations between disparate departments. This is particularly beneficial to companies in the product manufacturing industry, who must ensure effective organization-wide planning to achieve success.
For product manufacturers, integrated financial planning must begin with a sales unit forecast to predict how many different product SKUs will be sold in a fiscal year. Depending on the size of the company, this could be as little as ten product SKUs or as many as a thousand. This forecast must also consider sales region, channels, rep, customers, etc. A sales unit forecast can then be spread over the next quarter, month or week. Historical sales data can also be migrated from the company’s customer relationship management (CRM) system to further aid in the forecasting process.
Using the established sales unit forecast, the Office of Finance can make revenue projections, which will then aid in the creation of a build plan. This approach to integrated financial planning considers production timelines, material costs and waste, product demand, etc. After the organization determines their build plan, they can begin to develop their procurement strategy.
A procurement strategy must consider the future pricing of raw materials to ensure optimal cost savings and inventory levels. An integrated financial plan allows these companies to establish future contracts with suppliers to limit overspending on critical raw materials.
As a result, the sales organization within a product manufacturing company will need to reevaluate their pricing based on the cost of procuring the necessary raw materials. Using a Corporate Performance Management (CPM) software solution, finance can model each of the components of the manufacturing lifestyle to facilitate meaningful dialogue between sales and operations.
In addition, an effective integrated financial plan can inform capital investments. For example, if product demand is high in South America, a company may consider increasing their production capabilities in the region to offset freight costs. This future-looking perspective allows product manufacturers to be more strategic about their investments, contracts and sales.
