exec steering ship in storm

Keeping a Steady Hand at the Financial Wheel

March 13, 2013
When implemented and utilized correctly, financial management software can help organizations better track their assets and streamline business processes to achieve these goals, which will ultimately fuel organizational growth and positively impact the company’s bottom line.

For manufacturing companies, it has always been about stuff. Making stuff. Assembling stuff. Ensuring that you have sufficient components and raw materials on hand, and being able to deliver your products to your customers in a timely manner.

Aside from the obvious prerequisite of producing a quality product, successful manufacturers have always distinguished themselves from the competition by accomplishing these goals faster, better, or more efficiently than the competition. With that in mind, the ability to acquire, manufacture, ship and track the very tangible, real-world items involved in any manufacturing process is being given a significant -- and in some cases dramatic -- upgrade thanks to the virtual toolkit available in the latest generation of integrated financial software solutions.

In today's increasingly digital world, even the most "old school" manufacturing entities rely heavily on the coordination, communication and tracking capabilities of computers and advanced technical systems. But for all of the raw power and technical capacity afforded by these new technologies, the most essential ingredient of all often remains elusive: effective integration. Today, many leading manufacturers are beginning to realize that in a competitive marketplace, unlocking the power and potential of a sophisticated, customized and integratedfinancial and supply chain management framework can be more than just an asset; it can be a differentiator.

For manufacturing executives, key decision-makers and senior managers, there exists a distinct correlation between potential competitive advantages and effective integrated enterprise software solutions. The strategic goals of most manufacturing companies encompass not only the capacity to manufacture competitive products, but also the ability to operate profitably while limiting product development costs. Achieving this requires a company to have a firm grasp on its finances. When implemented and utilized correctly, financial management software can help organizations better track their assets and streamline business processes to achieve these goals, which will ultimately fuel organizational growth and positively impact the company's bottom line.

Additionally, such solutions can play a vital role in managing the inherent complexities of the modern-day manufacturing environment. This includes enhancing operational efficiencies, minimizing or eliminating avoidable downtime, and tightening scheduling and inventory controls -- effectively creating a seamless and synchronized link between process and product.

Penetrating the Fog of War

Without question, the single biggest advantage of integrated financial and supply chain management software solutions is the ability to penetrate through the "fog of war" that is a part of virtually every manufacturing environment. This creates a clear line-of-sight to make important connections and to enhance the visibility for essential information. That capability -- to make data available when needed and to identify relationships -- creates opportunities for significant efficiency improvements.

With different manufacturing lines, different categories of parts and materials, different providers, and different customers, optimizing efficiency can be an overwhelmingly complex task. The more integrated your financial and supply chain management system is, the more you can drill down and extract relevant and actionable information from the noise -- no matter how many "moving parts" are in play.

Manufacturers moving from segregated legacy systems to a new integrated system find themselves with the newfound ability to cull vital insights, identify pain points and focus on inefficiencies. For example, users can analyze scheduling to identify precisely where and when important deliveries have not arrived on time by performing a quick comparison between expected and actual delivery dates. If those discrepancies can be narrowed down to a discrete group of suppliers or variables, the problems can be more effectively addressed and remedied.

In addition to tightening timelines, the ability to integrate financial data on many different levels -- executing a comparative analysis and subsequent monitoring of inventory, scheduling, cost structures, and revenue structures -- can reduce waste and inefficiency in a more fundamental manner. That kind of visibility into the system enables manufacturers to take better advantage of optimized inventory levels, drastically reduce or eliminate overstock, better avoid out-of-stock circumstances and enhance inventory-forecasting capabilities to maintain optimum production levels.

The ability to avoid assembly lines having to be stopped, started and/or reconfigured is a tremendous time- and cost-saving advantage. The best integrated financial management software provides manufacturers with the ability to scan and track important information based on a wide range of criteria, including client name, date, location, type of material and other variables. It is this highly flexible and adaptively functional utility that makes these systems so effective.

Best Practices

Without a strategic implementation process and thoughtful interface, even the most powerful new financial management software will not be optimized for success. Unlocking the sophisticated functionality and integrated efficiency of the best software and systems requires a thorough understanding of both the software itself and the technical and operational details of the manufacturing environment. Because of this need for coordination, a collaborative approach to design and implementation is a necessity.

We recommend that experienced financial and supply chain management software consultants work closely with clients to effectively deploy solutions. The first step is to consult with manufacturing executives to ensure that all parties are on the same page with respect to broad priorities and solution goals. Subsequently, extending consultation and collaboration to managerial team members, facility and factory-floor leaders can help to clarify important company-specific processes and functionality requirements that will frame the ultimate utility of the new system.

Because the best integrated software solutions are fully customizable, virtually every aspect of design and implementation can be adapted or modified to meet the specific operational requirements of each individual manufacturer. From the user interface to the way data is presented and to the details of how analyses are performed -- the functional and aesthetic aspects of the system can and should be user-specific.

Application security is a priority as well. Manufacturers have a vested interest in ensuring that their integrated financial and supply chain management system is designed in such a way that access, functionality and the procedural architecture of the software provides maximum technical and operational safeguards. To that end, administrators should work to ensure that the integration of the systems enhances, rather than compromises, information security. When these priorities are achieved, and the enterprise system is implemented to meet operational demands, manufacturers are finding that they have a powerful, flexible and integrated tool at their disposal.

Steven Brenner is a senior principal consultant and Shannon Klabnik is the PeopleSoft practice directorat MIPRO, a consultancy specializing in implementations, upgrades and optimizations of Oracle's PeopleSoft applications.

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