Last, but not least, came the reorganization of processes because it takes much less time if something runs systematically rather than firefighting or rushing. Our two most useful developments were the tracking of the maintenance costs and the introduction of the yearly investment cycle.
Maintenance costs caused a lot of headaches at the beginning because it was only at the end of the month that we found out we had overspent by a high amount, or high value orders didn't arrive as expected, although we had budgeted them. This is not effective in a multinational organization thinking in monthly budgets because either the KPIs go heavily into the red and we need to explain them, or if we didn't spend the allocated amount, the budget is taken away, and we can't maintain the plant properly. If this is only discovered after the end of the month, there's nothing that can be done; the issue must be solved earlier.
To create transparency and traceability, we first stopped accepting invoices which did not have orders from the ERP in the background. I simply told my colleagues that I wanted to know how much we were spending, meaning no phone orders, no orders in an email, but everything should be documented in the system, with expected arrivals. From the resulting dataset and the booked invoices, our finance colleagues developed a relatively simple report that showed the planned budget broken down by months, the amount already received for the current month, and the orders planned for receipt at that time.
We ran this report weekly, and with this information we could investigate if a bigger order didn't arrive on time or it was visible if we might have overspent in a given period and we could work on it by figuring out what could be delayed. And it also showed where a significant cost could fit in, I didn’t have to decide blindly on spending; I always knew if there was room for it Over a few months, the process developed from end-of-month explanations to planning, and finance also knew which invoices to look for, what was completed, and what needed to be accrued. Again, a lot of unnecessary hassle was eliminated from our daily routines.
It's worth considering whether something regularly causes unpleasant surprises and whether transparency in that process can be increased. The more accurate the tracking, the easier it is to intervene if we deviate from the preferred direction.
As for the investment story, I plan to share it by Tuesday...
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