How manufacturers can better manage inventory, improve production, and lower overtime costs

Integrated Business Planning helps boost operational performance for manufacturing companies by unifying forecasting technologies, data, and processes

The need for effective, timely financial planning has never been more pressing – or more challenging to meet. Effective planning requires manufacturers to carefully balance market forces like uncertain demand, global trade standoffs, and disruptive technologies with accurate forecasting of production and operations. Lacking that, manufacturing businesses may face high overtime costs, production inefficiencies, inadequate inventory levels, missed delivery times, and lower workforce retention.

One of the biggest barriers to effective planning is inconsistent financial and operational data across disparate, unconnected systems. The lack of a centralized solution can introduce variances in metrics, data, and calculations, as well as make resolution of financial variances a time-consuming nuisance.

Compounding the matter are enterprisewide process and system interdependencies for demand, production, material requirements, inventory, and supply chain planning. It doesn’t help that most manufacturers still use manual processes and spreadsheets, which are slow, time-consuming, and prone to human error. In today’s tight labor market, financial and operational leaders must also consider how inaccurate or incomplete planning can affect the workforce and identify solutions to mitigate that impact.

Increasingly, manufacturers see the value of an Integrated Business Planning (IBP) strategy that unifies people, processes, and technologies across functions. IBP aligns financial and nonfinancial data, encourages collaboration, connects planning processes, and helps ensure transparent reporting. An IBP solution centralizes siloed data in a single repository and automates processes, which can help manufacturers better calculate overtime percentages, optimize inventory levels, on-time delivery, assumptions versus actual materials used, and available machine time.

The Right Tools for Forecasting

Comprehensive what-if scenarios and modeling: Helps manufacturers quickly and accurately measure performance and determine capital allocation.

Operational metrics: Enables stakeholders across functions to understand the interplay of operations, productivity, and profits in real time.

Balance scorecard: Tracks planned and actual metrics for finance, production, warehousing demand planning, HR, and more.

Dashboards: Uses operational metrics to enable real-time data sharing and updating of forecasts.

All of this will require that financial and operational systems and data be integrated on a centralized platform to create a single source of truth.

How IBP helps manufacturers achieve long-term success

IBP can enable the finance function and operational teams to deliver – and share – timely, accurate planning and reporting based on real-time data. Results may include:

- Savings in overtime costs through more accurate labor forecasting.

- Lower inventory levels that can reduce operational costs and raise revenues.

- More precise calculation of on-time delivery.

- Reduction in use of manual spreadsheets to improve forecast accuracy and staff productivity.

- More efficient machine utilization.

- Improved materials planning.

- Anticipation of the impact of external factors like wages, climate, and labor needs.

- Management of suppliers to lessen impact of fluctuating commodity prices.

- Quick ROI, usually in three to six months