Accounting is a distant concern for industrial production. In fact, it is often even a little annoying. Engineers see finance as not making life easier at best.
In the factory floor level, the needs of financial monitoring are more practical. Financial management needs in industrial manufacturing are not so much part of mandatory reporting, as they are indicators that help in daily operations management: including in planning, forecasting and management of the most up-to-date information of profitability and costs.
The generating and collecting of pragmatic financial data that supports control must be part of the normal routine. Data is then generated naturally along with production planning, production management and other processes. The challenge in manufacturing industry, of course, is that the indicators are very different: there are surely as many monitoring methods as there are companies. For example in raw material intensive industries, the key is purchase and inventory management, while in labour-intensive processes profitability is optimized by managing the use of human resources.
What does this mean for an information system? It must flexibly serve diverse needs. The system does not need to reach the precision of an accounting system, but the inventory and invoices must match.
Support without the limitations of financial accounting
Accounting and ledgers are very fixed-form and regulated processes. Lean System based MOM – Manufacturing Operations Management also serves fluently company’s financial management and its accounting systems, such as group level ERPs, through integration.
Financial monitoring must therefore be able to be tuned so that it supports operative processes, without the limitations of external accounting. For example, the budget and result in project businesses are the responsibility of project managers. Project manager uses data mainly for planning purposes while finance department’s view is more in analysing past events in accounting.
In addition to the routines involved in project accounting, product profitability accounting and cost monitoring of purchase operations, there is always a need for ad hoc reporting. Examples of this need include quick comparisons of various possibilities or the simulation of different options. In this case, it is required that the systems user interface supports the needs and contains mechanisms of rapid data retrieval.
From realized figures to forecasting
In recent years, thinking has turned more and more from reporting and monitoring to forecasting and planning, particularly among machine and equipment manufacturers. Earlier, the key indicator was the realized figures. These are still important, but production planning now also looks ahead instead of looking only into the rear-view mirror.
The development of production planning and financial monitoring cannot be left entirely on the shoulders of the IT and finance department however. A good outcome requires that users, who are the actual producers of the data, are strongly involved already in the planning phase. We have extremely positive experiences with customer projects where a diverse end user group has been part of the process and solution planning team. This has embedded the concept and the desire to pull together into the entire group. When we are listened to, we can influence the tools that are then used for dozens of years.
Most enterprise resource planning systems have been developed from financial management software. Lean System development approaches the solution from the other philosophical direction, planning takes the lead. Up-to-date financial data that supports operations planning benefits everyone.