With the onset of COVID-19, we’re no longer in a business-as-usual environment. There are disruptions across the board, especially when it comes to supply chain issues.
According to a recent Newsweek article, 7 out of 10 small business owners say supply chain issues are hurting their bottom line. And only about 13% of those affected businesses believe anything will get better during the next six months. Larger corporations are feeling the same effects.
The White House says these issues aren’t unique to the U.S., but rather a global problem exacerbated by the Covid-19 pandemic. These shortages and delays have further aggravated rising prices. Inflation is at a 40-year high. According to the Department of Labor, the Consumer Price Index rose 7% in 2021.
The prices for basic commodities like steel, natural gas, and container shipping have risen significantly. Not to mention companies are struggling to secure materials to make the products to fill orders. The labor market has contracted and companies are struggling to find adequate talent, making it that much more difficult to find people to fill all the orders which are backed up and piling in.
Along with these factors, we’re seeing a new surge in demand for seemingly everything, which has made business building one of the top priorities for organizations, double what it’s been in recent years. Driving this, in part, is that leaders expect half of their revenues five years from now to come from products, services, or businesses that don’t exist today.
In response to these ongoing pressures, organizations see digitization and automation as top drivers of productivity and profitability for the next three years. According to a recent McKinsey report, the best way to get ahead of operational difficulties is, “leaders can set up resilient, risk-tolerant supply-chain structures, double down on digitization, and achieve real-time visibility and systematic responses to external developments.”
Thus, the corporate budgeting process, strategic planning, and real-time data analytics are more important now than ever. And making all of that fully digitized and automatic has become the urgent mandate.
Many companies struggle with either subpar financial reporting capabilities from their Enterprise Resource Planning (ERP) system, or try to operate with only a partially implemented ERP. These issues only intensify the current market challenges.
Although most business leaders understand the importance of corporate budgeting and planning, far too many have suffered through the long process of building a budget that by the time it’s completed is old news or can’t be instantly adjusted for changing market conditions or company needs. Just as often, they know, too, that budgets can be used as an excuse for variance analysis with little or no meaning. One of the primary culprits behind a failed budget is the lack of connection between the ends and means for achieving them – in other words, a lack of connection between strategy and execution.
However, if budgets are done correctly, they can provide the necessary teeth – and a significant competitive advantage over rivals – to otherwise pie-in-the-sky dreams.
Since effective budgeting and forecasting presupposes a good strategy, it’s important to understand what factors leaders should consider as its developed. At a high level, annual strategic planning is the process of connecting the company’s long-term vision with how it will execute the plan, or how it will achieve its goals. In general, strategic planning needs to identify what markets the company should address, how much they can spend in those markets, whether or not additional products need to be blended into the overall offering to satisfy the market plan, what equipment or labor are available in the supply chain to achieve goals, and how capital expenditures would be funded.
To ensure strategy is connected with execution in budgeting, the vast majority of companies now recognize the need for adopting the right technology and digitizing the entire process. The days of creating and deploying budgets in spreadsheets are long gone – as they are increasingly seen as too risky, archaic, and prone to too many errors.
When selecting the best technology solution for your budgeting and planning needs, the following should top your list:
Automates Entire Process – ensures the budgeting, forecasting, and reporting can be accomplished with minimal time and effort.
Plans For What-If Scenarios – leaders should be able to see the impact of decisions before making them by generating multiple scenarios and visualizing the results of each potential outcome.
Improves Accuracy – should provide an automated single source of truth, which can bring in all data in real-time (whether from multiple ERPs, spreadsheets, or other data sources).
Provides Flexibility – today’s environment requires the ability to quickly and easily change budgets on-the-fly. When COVID hit, many organizations were forced to scrap their annual budgets, which took months to build, for entirely new ones. The right technology will make this simple.
Enhances Insights – with data integrated into one system, leaders have greater insight about the significance metrics have on the budget. The tool should automate dashboarding and financial reporting, provide a big picture of the health of the organization, and give robust analysis of where its been and where it’s going.
Streamlines Communication – should eliminate silos, which businesses can no longer afford. All financial planning & analysis must be automatically aligned across the entire organization.
Gives Deployment Options – should provide the flexibility to be used in the Cloud or on-premise. This allows for any team members to have access to the same information whether they’re in the office or working from home, giving the organization the flexibility it needs.
While looking for a technology solution, make sure you don’t select a software tool that replaces one form of complexity for another, such as spreadsheets. The right solution, such as Synoptix’ Financial Planning & Analysis, should be easy enough to deploy and robust enough to connect high-level planning with the nitty-gritty details of the business – the very details that arm any budget with teeth, and accuracy.
A tool, such as Synoptix, bridges the information gap to overcome supply chain challenges, ensuring users have the critical insights needed to make the best decisions.
Sample Synoptix Supply Chain Financial Reports to Overcome Disruption:
Exceptions – Do more with less by tracking what materials you have available to promise, and prioritize orders that can be fulfilled quickly.
Cost of Bill of Materials & Indented Bill of Materials – Stay on top of the costs of available materials and calculate your profit margins prior to fulfillment.
Sales Orders Available to Ship – Know what parts you have on-hand and what orders are currently available to ship so that you never have to worry about falling behind on your orders.
Bill of Materials with Available to Promise – Know what materials you have available so that you can know what products can be promised within a specific time frame.
And there’s so many more…
Visit Synoptix’ Financial Planning & Analysis tool for more information.
Jeana has been in the software industry for 15+ years specializing in ERP reporting solutions. She has decades of experience in creative content development and marketing and enjoys exercising, traveling & spending time with her husband & twin boys.
Download Spreadsheets-The Corporate Secret Killer & What to Do About It to better understand its inherent errors, how to manage quality control & overconfidence, with detailed solutions on improving spreadsheets in financial reporting.
THOUGHT LEADERSHIP WHITEPAPER
We want to provide you with an update on the Log4J vulnerability that was identified this weekend as it relates to your Synoptix installation. The short answer is that there should be no vulnerability issues with Synoptix. Synoptix no longer uses Log4J. Version 7 did use version 1.2 of Log4J (which was not vulnerable), and should therefore also be clear of any vulnerability issues related to Log4J version 2.0-2.14 (which was identified this weekend as having vulnerability).