INTENTIA , the collaborative enterprise software company, has developed a ‘closed loop’ sales budgeting tool that is fully integrated into Movex Demand Planner.
The new tool is a key component of ‘closed loop’ collaborative budgeting for the entire supply chain, and Intentia believes it will reduce budgeting time by a minimum of 50 per cent compared to conventional processes.
Intentia also believes the new integrated sales budgeting tool is unique.
It has been developed because Intentia saw a business requirement for a more collaborative and inclusive, multi-dimensional approach to budgeting that tightly links together the sales budget, production and logistic resources with the financial goals.
Peter Cornelius, product director at Intentia Research and Development, said many companies would like to use ‘closed loop’ budgeting because it was more accurate.
“It enables companies to run and evaluate different scenarios and options for the whole supply chain, and create a better managed and more accurate budgeting process. But, in the absence of integrated systems, ‘closed loop’ is a difficult process to run.”
Cornelius said currently the budgeting process for most companies was too linear.
“The sales budget process, in particular, is awkward and cumbersome. It involves the extensive circulation of spreadsheets for completion which then have to be consolidated.
“But, using the new tool, sales budgets are entered directly into the system, with the added benefit that user defined column values can be set in the budget model to define areas such as margins and key performance indicators (KPIs) that relate to the budget.
“And, like a spreadsheet, each column replicates its relationship with other defined columns.”
Cornelius explained that the Movex collaborative enterprise system acted as the transactional engine in ‘closed loop’ budgeting.
He said information was taken from Movex into Movex Demand Planner (DMP) to create the sales budget. This information was then taken into Movex Supply Chain Planner (SCP) to simulate planning options and identify constraints on purchasing, production and distribution.
The sales budget and constraints were then used to arrive at a consensus sales budget which was used in Movex to calculate the costs drivers and feed Movex Professional Planner for the profit and loss analysis.
However, if the simulated model did not meet required profit levels and return on capital employed, the whole process could quickly be re-run using different parameters and cost drivers.
“By using the sales budgeting tool the whole process becomes faster, more flexible and more user friendly. With ‘closed loop’ companies can break out of the ‘silo’ approach to budgeting, be more collaborative and see the business in a different light. The agreed budget is more accurate and has a corresponding positive impact on the bottom line,” he said.