Title: How to Engage your Finance Department in your Operations: Metrics, Continuing Analysis, Looking Forw
1How to Engage your Finance Department in your
OperationsMetrics, Continuing Analysis, Looking
ForwardNAMP 2009 Meat Industry Management
Conference
Dan Wang Loretta ReedChicago Meat
Authority, Inc. RSM McGladrey Chief Financial
Officer Director 773.254.3811 312.462.6504
2Engaging Finance
- Finance involvement
- Developing measures
- Frequency of measures
3Engaging Finance
- Does Finance lead or follow in your organization?
- What barriers prevent Finance from being a
leader?
4In order to become a leader, Finance needs
- Credibility
- Understand key components of the business
- Demonstrate knowledge of the business
- Be more than just the area that does the books
- May require training and time on the floor
- Persistence
- Keep presenting ideas
- Determine who needs to know what and get it for
them
5There are metrics for which it is vitally
important that Finance and Operations be involved.
- Yield
- Productivity
- Per pound cost
- Raw material received weight and consistency
- Labor paid and reported
- Standard costing and variances
- Sales pricing
- Others?
6There are key reasons for engaging Finance in
your operations
- Much of the information resides within Finance or
flows through Finance - Central place to combine data from across
functions so metrics are calculated in a standard
manner process and reporting consistency - Staff trained to understand, translate and
analyze data - Staff generally have the tools and accessibility
needed
7Deciding on where Finance should be involved in
Operations is a collaborative effort.
- Determine what information is key to the
organization - Look to the business strategy and business
objectives to decide what is needed to determine
if the company is on track. - Decide on the measures that will provide the key
information historical, real-time,
forward-looking - Identify data required to consistently produce
measures - Decide if industry benchmarking is required
NAMP members have access to Business Connections
portal - Produce, review and discuss measures on a regular
basis leading to actionable items
8There are several factors that determine if
metrics will be successful
- Education
- Staff understand the metrics how they are
developed, what they mean and why they are
important to the business - Discussion
- Metrics need to be published and discussed. If
they are not discussed, they are soon ignored and
of little value. - Controllable
- Metrics are most meaningful to a company when the
business is able to control the activities
underlying the metrics so that change can be made
as required.
9The frequency of the measures impacts their value
to the business
- Tactical, operational metrics need to be reported
in a timely manner, preferably daily or weekly,
so that corrective action can be taken. - Rejected material receipt, processing,
customer, external entity such as inspector - Yield
- Productivity
10The frequency of the measures impacts their value
to the business
- Analysis of measures focuses on the trends within
the metrics and requires some historical data in
order to be valid. Since the trend, and not the
individual data points within the analysis
provides the value, analysis is generally
performed on a monthly basis. - Vendor reject rates
- Shipping costs
- Yield rates
- Customer returns
11The frequency of the measures impacts their value
to the business
- Looking forward for the business includes the
expected value of the pipeline, operations
planning data in conjunction with sales forecast,
the capital expenditures budget, space
considerations, and pricing/cost analysis. Given
the strategic nature of this information, this
exercise is done at most monthly and often
quarterly.
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