Manufacturing Executive - March/April 2009 - (Page 51) data, ensure that it is clean, and conduct “what if” analyses. There also must be active participation from the different parts of the organisation, the report says. “Companies have a fundamental gap in terms of how they do financial planning and how they do operational planning,” says Narayanan Viswanathan, supply chain and logistics research director at Aberdeen. “S&OP needs to evolve into a more integrated business process, and it should be bidirectional,” meaning financial goals drive the S&OP process, and if the manufacturing facility doesn’t have enough capacity or enough demand, that should be reflected in the financial targets. Right now, “there is not one solution that has all of the pieces together. There is a gap in the marketplace,” Viswanathan says. Elkay Manufacturing Co., a maker of plumbing products, best known for its stainless steel sinks and faucets, has more than 5,000 employees, 16 production plants, and 14 distribution centers. When John Hrudicka joined the organisation two years ago as vice president of finance, his first priority was to organise the company around financial accountability. Hrudicka’s predecessor was ready to invest in OutlookSoft Corp.’s financial planning tool, an on-premise licensed solution that was going to cost upward of $400,000 and require a year to deploy, he says. (SAP acquired OutlookSoft in May 2007.) Instead, he decided to couple an on-site costing analytics tool from Acorn Systems Inc. with the SaaS-based balanced scorecard software from Host Analytics, an enterprise performance management tool that measures corporate goals and progress against targets. “There is a tremendous advantage to a hosted application in terms of affordability without sacrificing functionality,” Hrudicka says, noting that he addressed two significant needs of the business — cost analysis and scorecarding — for the same price he would have paid for OutlookSoft. W Nowhere to Hide MONEY TALKS hile Otis Spunkmeyer’s Wegener chose the Host Analytics software as a budgeting tool, Hrudicka is counting on Host Analytics’ balanced scorecard to instill accountability across the company and, more important, to make finance strategic rather than an under-valued function. “I wanted to transform the financial organisation to have an equal seat at the table driving the business results,” Hrudicka says. The way to do that is to first understand the financial dynamics of the company. The scorecard, coupled with an executive dashboard, provides charts and graphs showing how Elkay is performing against targets. Individu- als, departments, business units, and the overall corporate strategy are measured against established key performance indicators. It is basically a financial performance management application, but, when coupled with the Acorn system, the tools can measure profitability by customer and even by SKU. At Elkay, the scorecard touches finance in every department, from human resources to marketing. And now, “everything is transparent,” Hrudicka says. “Every initiative is tracked and measured for everyone to see There is nowhere to hide.” Of course, the goal is not to punish underperformers, rather to create self-managed employees who can execute against a corporate strategy that continues to evolve. It’s what Hrudicka calls a “continuous planning environment.” The ultimate goal, Aberdeen’s Viswanathan says, is to empower people. With or without the technology, “best-in-class companies need to have good people who know how to run their business.” Similarly, at Otis Spunkmeyer, which operates 52 sales centers, there is a new level of detail available to end users, one that sorts sales by customer, region, and product. “Now we have a different level of accountability within our sales organisation which will ultimately be our biggest transformation,” Wegener says. And if the sales organisation can track accounts more reliably, the manufacturing side of the house can adjust accordingly. For example, the John Galt planning portal, which Otis Spunkmeyer is installing as an on-premise licensed product, can pull information from the Host Analytics system, as well as from other parts of the organisation, including inventory, scheduling, and capacity planning. Ultimately, it may serve as a tool to figure out the most efficient way to schedule batches of cookies. That piece of the puzzle is not live yet, but it will be just as important as the front-end finance tool. For manufacturers such as Otis Spunkmeyer, the motivation to assemSPENDING PRIORITIES ble the right tools to support the S&OP Here are the top supply chain application investment areas for manufacturers. process goes beyond just coping with a surge in cookie sales. It’s about gainSupply chain visibility ing the agility required to survive. 54% “How many companies out there, Sales and operations planning when they were doing their annual 34% [financial] plan in October, could Inventory optimisation foresee a 3,000-point swing in the 32% Dow or that, over the summer, oil Supplier/customer collaboration would go from $80 a barrel to $160 a 25% barrel? They can’t; there’s no way,” Supply chain network design says Host Analytics CEO Jon Kondo. 21% “That’s what we see driving corpoPerformance management rate performance management. Old 19% spreadsheets aren’t nimble enough Transportation management to do this. You have to be able to sit 19% back and say, ‘Our world changed overnight. Now what are we going to Source: Aberdeen Group, “The Supply Chain Executive’s Strategic Agenda 2008” do about our business?’ ” ME Manufacturing MAR/APR-09 Executive 51
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