Drafting/design, implementation and launch of a complex Management Control system immediately after the launch of a new corporate ERP (SAP-Hana).
The Situation
The company operates in the furniture sector. It is growing very rapidly and has ambitious development plans, which include external lines. It operates across multiple locations, including production, commerce and distribution. Tens of thousands of items are handled: finished and marketed products, as well as components and semi-finished products.
The company has no “history” of planning, control and reporting and the introduction of a senior controller has not delivered the desired results. The administrative team is very diverse in terms of age, experience, skills and company seniority. The company’s new ERP, SAP HANA, has just been released. It is very complex and rigid compared to the previous one and is not being used correctly. However, the company’s management wants a decisive turnaround quickly because it can no longer afford to navigate “by sight”.
The Problem
The temporary manager must work simultaneously on multiple fronts and with different time schedules. He must quickly exploit all the potential of the new information system to introduce the most basic Management Control tools and correctly fulfill regulatory and tax obligations. At the same time, albeit over a longer time period, he will have to correct some errors in the setup of the system, initiate correct organizational procedures for the management and processing of data, train those employed in the administrative, production and logistics areas, and then refine the planning, control and reporting system, also introducing Key Performance Indicators.
Specifically, the objectives requested of Contract Manager s.r.l. are:
- Design, structure and release a company management control system capable of guaranteeing the correct performance of planning, control and periodic reporting activities.
- Provide support and specialist training to employees of the administrative area and all other functions involved.
- Participate in the ongoing process of fine-tuning the SAP company ERP for Finance.
- Highlight any critical issues, suggesting improvement actions aimed at optimizing processes, improving margins and business performance.
The Solution
Contract Manager s.r.l. identified a qualified, experienced resource with a solid knowledge of SAP, who had always worked in the management control area, both in Italy and abroad, in multinational groups with production, commercial and distribution activities.
- A monthly reporting system was immediately introduced (previously it was bi-annual) by switching from the income method (with costs, revenues and inventories) to the equity method (Anglo-Saxon style) already present in SAP but not used.
- Cost centers, profit centers, and business units were properly identified and appropriate reporting tools were created for each.
- Industrial accounting was set up by adjusting standard costs, average costs and final costs, introducing processing cycles and bills of materials, and solving old problems that have always caused errors and adjustments (e.g., finished products that are also components).
- An operational plan has been prepared, structured according to the new management control system, thus allowing monthly reporting with evidence of deviations from the budget, analysis of deviations and proposal of monthly corrective actions.
- A general outline of KPIs (key performance indicators), developed in collaboration with the human resources department, has been prepared and adopted for a new MBO plan for top personnel.
- The company climate has improved both within the administrative area and between other company functions by virtue of fewer conflicts, leaner and smoother operational processes and better execution of assigned tasks and duties.
The temporary manager of Contract Manager s.r.l. was simultaneously the architect of the new control system, a business partner for the company management, and a teacher and example for all employees.