Awsaf ALhamazani’s Post

Great post to share w/ my students, that is pretty much my first lecture in my Intro to SCM course…The one-page handout in the lecture can be found in the comments section: https://lnkd.in/gVZ_zJbB. https://lnkd.in/g8e-y-3d https://lnkd.in/gn-97v_B Remember, ROI = profit margin * asset turnover rate (ATR). ATR = sales/total assets and total assets = current assets + fixed assets, and current assets = inventory + accounts receivable + cash. I keep telling my students if they can widen margins and/or increase ATR, then ROI will go up. So, if you can reduce your total assets without changing sales and/or increasing sales, then ATR goes up. For example, reduce your inventory and your ATR will go up and ROI will go up. If you can do more with less, then your ATR will go up. No other major/function (SCM) has a greater impact on what goes into the ROI calculation. That is why SCM graduates will likely be immediately bonus eligible and their highest ranking functional area (SCM) leader will have a VP in front of their name (VP of SCM). What are most companies doing to increase ATR? I also asked this in class and it was one of the most important parts of the lecture. It was a major reason for the supply chain chaos during covid! Hint: xxxsourcing. Do you know the answer?  The answer to this question has been the focus of most supply chain organizations for the last 30+ years.  Why would doing this increase ATR? Answer: it helps them do more with less (better, faster, cheaper). Lastly, I am of course a huge fan of the Business Analytics minor for all business majors. For details: https://lnkd.in/g6eTb6SC. I am also a huge fan of the Accounting minor. Why? College Accounting to me feels like Supply Chain/Corporate Finance. The Accounting Minor for SCM Majors & most other majors seems like a great fit & has grown on me. Long term in your careers, understanding SCM/Corporate Finance will be critical. Basically, your opportunities are endless if you learn how to talk to the CFO. You will hit a ceiling professionally if you cannot talk CFO talk. Tomorrow’s CEOs Will Come from an Unlikely Place: The Supply Chain: https://lnkd.in/gcbie2iD. https://lnkd.in/gBPZJsVq I had a student ask: Shouldn’t I major in Finance or Accounting if I want to become a CEO? Note, (I encourage my SCM students to get an Accounting minor): College Accounting to me feels like Supply Chain Finance. The worlds of Finance & SCM have collided. Your opportunities are endless if you learn how to talk to the CFO…https://lnkd.in/guejd-vi. Two classes in our Accounting minor, good fit for SCM types, right?: 3220: Cost & Managerial Accounting and ACTY 4220: Cost Mgmt & Analytics. FYI, we make EVERY business major take FIN 3200 - Business Finance Decisions.

The procurement department maintains a crucial relationship with the finance department within an organization. **Procurement** involves acquiring goods and services. It requires careful budgeting and cost management, both of which are deeply intertwined with financial considerations. **Finance** is responsible for managing the organization's financial health, including budgeting, accounting, and reporting. **Collaboration** between procurement and finance is vital for several reasons: 1. **Budgeting and Planning:** Procurement relies on finance to set and manage budgets. Finance determines how much can be spent on various goods and services, ensuring that procurement activities align with financial constraints. 2. **Cost Control:** Procurement negotiates prices and seeks cost-effective solutions while finance monitors expenditures to maintain financial stability. Together, they work to minimize costs and optimize spending. 3. **Reporting and Compliance:** Finance requires detailed reports on procurement activities for auditing and compliance purposes. Procurement must provide accurate data to ensure transparency and accountability. 4. **Risk Management:** Both departments collaborate to assess and mitigate financial risks associated with suppliers or market fluctuations. The synergy between procurement and finance is essential for ensuring that the organization's purchasing strategies support overall financial goals, contributing to sustainable growth and financial health.

Cash flow is considered to be the lifeline of a business. Steady cash flow and healthy working capital are essential for financial success.   However many manufacturing companies face cash flow issues one of the reasons being lack of financial discipline. Hence Implementing Financial discipline is the key for the same.   Financial Discipline involves defining a set of rules, systems, policies or procedures relating to every financial aspect of the organization such as:   🔷 Implementing Budgets & Control : Define specific budget for each department, unit, cost centre, according to your business objectives. 🔷 Payable & Receivable Management: Define schedule for payables & receivables. Set up alerts notifications to track its happening on time 🔷 Credit Controls: Define credit control policy with specific credit value and maximum credit days for each customer. 🔷 Inventory control: Adopt Material Requirement Planning strategies to ensure optimum inventory for smooth production 🔷 Procurement Process : Define policies for procurement to improve negotiation leverage & save procurement time & cost 🔷 Financial KPIs: Define KPIs for cash flow, current ratio, manufacturing cost, receivables and payables etc to monitor performance & take necessary actions 🔷 Review Costs & Trends : Continuously monitor the data for costs relating to production, inventory, overheads etc and take corrective actions if required   Improve Cash flow & profitability of your manufacturing company with Financial Discipline and ERP solution https://lnkd.in/dfQfYvW #cashflow #profitability #workingcapital #finance #financialdiscipline #healthyworkingcapital #strategies #budget #costcontrol #payables #receivables #creditcontrol #inventory #procurement #financialKPIs #review

Cash flow is considered to be the lifeline of a business. Steady cash flow and healthy working capital are essential for financial success.   However many manufacturing companies face cash flow issues one of the reasons being lack of financial discipline. Hence Implementing Financial discipline is the key for the same.   Financial Discipline involves defining a set of rules, systems, policies or procedures relating to every financial aspect of the organization such as:   🔷 Implementing Budgets & Control : Define specific budget for each department, unit, cost centre, according to your business objectives. 🔷 Payable & Receivable Management: Define schedule for payables & receivables. Set up alerts notifications to track its happening on time 🔷 Credit Controls: Define credit control policy with specific credit value and maximum credit days for each customer. 🔷 Inventory control: Adopt Material Requirement Planning strategies to ensure optimum inventory for smooth production 🔷 Procurement Process : Define policies for procurement to improve negotiation leverage & save procurement time & cost 🔷 Financial KPIs: Define KPIs for cash flow, current ratio, manufacturing cost, receivables and payables etc to monitor performance & take necessary actions 🔷 Review Costs & Trends : Continuously monitor the data for costs relating to production, inventory, overheads etc and take corrective actions if required   Improve Cash flow & profitability of your manufacturing company with Financial Discipline and ERP solution https://lnkd.in/gS4ZK2Ui #cashflow #profitability #workingcapital #finance #financialdiscipline #healthyworkingcapital #strategies #budget #costcontrol #payables #receivables #creditcontrol #inventory #procurement #financialKPIs #review

The link between #Finance and #Procurement is crucial for ensuring accurate financial planning and efficient resource management. Here’s how they are connected: #Budgeting& #Forecasting: Procurement provides Finance with detailed forecasts of expected purchases, including quantities and prices. This helps Finance create accurate budgets and financial plans. #Cost_Management: Finance relies on Procurement to manage costs effectively by negotiating favorable terms with suppliers and finding cost-saving opportunities. This directly impacts the company’s bottom line. #Compliance& #Control: Both departments work together to ensure that all purchases comply with company policies and regulatory requirements. Finance oversees the financial controls, while Procurement ensures adherence to procurement policies. #Cash_Flow : Procurement’s purchasing decisions affect the company’s cash flow. Finance monitors these expenditures to ensure that the company maintains healthy liquidity levels. #Reporting& #Analysis: Procurement provides Finance with data on spending patterns, supplier performance, and market trends. Finance uses this information to analyze financial performance and make informed decisions. #Strategic_Planning: Both departments collaborate on strategic initiatives, such as forward buying and hedging, to mitigate risks and capitalize on market opportunities. By working closely together, Finance& Procurement ensure that the company operates efficiently, stays within budget, and achieves its financial goals...

🌟 **Role of a Costing Officer in an Organization** 🌟 As a **Costing Officer**, one plays a crucial role in ensuring the financial health and operational efficiency of a business. Here are some of the key responsibilities: 📊 **Cost Analysis & Reporting** Regularly analyze production costs and provide detailed reports to help management make informed decisions. 🔍 **Budgeting & Forecasting** Assist in preparing budgets and cost forecasts, enabling the organization to allocate resources effectively. 📈 **Variance Analysis** Monitor cost variances by comparing actual costs to the budgeted or standard costs, identifying the root causes, and recommending corrective actions. 📦 **Inventory Management** Maintain accurate records of inventory costs, ensuring that stock levels are aligned with operational needs while minimizing excess costs. 🔧 **Cost Control & Optimization** Work closely with various departments to identify cost-saving opportunities and improve overall operational efficiency. 📚 **Financial Compliance** Ensure that all costing activities comply with relevant accounting standards and internal financial controls. The role requires attention to detail, strong analytical skills, and a deep understanding of financial principles. Costing Officers help businesses stay competitive and profitable by ensuring accurate cost tracking and reporting. #CostingOfficer #FinanceRoles #CostManagement #BusinessEfficiency #FinancialAnalysis #Accounting

Improve Cash flow & profitability of your manufacturing company with Financial Discipline Cash flow is considered to be the lifeline of a business. Steady cash flow and healthy working capital are essential for financial success. Implementing Financial discipline is the key for the same. Financial Discipline involves defining a set of rules, systems, policies or procedures relating to every financial aspect of the organization such as: 🔷 Implementing Budgets & Control : Define specific budget for each department, unit, cost centre, according to your business objectives. 🔷 Payable & Receivable Management: Define schedule for payables & receivables. Set up alerts notifications to track its happening on time 🔷 Credit Controls: Define credit control policy with specific credit value and maximum credit days for each customer. 🔷 Inventory control: Adopt Material Requirement Planning strategies to ensure optimum inventory for smooth production 🔷 Procurement Process : Define policies for procurement to improve negotiation leverage & save procurement time & cost 🔷 Financial KPIs: Define KPIs for cash flow, current ratio, manufacturing cost, receivables and payables etc to monitor performance & take necessary actions 🔷 Review Costs & Trends : Continuously monitor the data for costs relating to production, inventory, overheads etc and take corrective actions if required Have you defined policies & procedures to maintain financial discipline for improving your cash-flow and profitability? https://lnkd.in/d7Hq7y9m #cashflow #profitability #workingcapital #finance #financialdiscipline #healthyworkingcapital #strategies #budget #costcontrol #payables #receivables #creditcontrol #inventory #procurement #financialKPIs #review

Improve Cash flow & profitability of your manufacturing company with Financial Discipline Cash flow is considered to be the lifeline of a business. Steady cash flow and healthy working capital are essential for financial success. Implementing Financial discipline is the key for the same. Financial Discipline involves defining a set of rules, systems, policies or procedures relating to every financial aspect of the organization such as: 🔷 Implementing Budgets & Control : Define specific budget for each department, unit, cost centre, according to your business objectives. 🔷 Payable & Receivable Management: Define schedule for payables & receivables. Set up alerts notifications to track its happening on time 🔷 Credit Controls: Define credit control policy with specific credit value and maximum credit days for each customer. 🔷 Inventory control: Adopt Material Requirement Planning strategies to ensure optimum inventory for smooth production 🔷 Procurement Process : Define policies for procurement to improve negotiation leverage & save procurement time & cost 🔷 Financial KPIs: Define KPIs for cash flow, current ratio, manufacturing cost, receivables and payables etc to monitor performance & take necessary actions 🔷 Review Costs & Trends : Continuously monitor the data for costs relating to production, inventory, overheads etc and take corrective actions if required Have you defined policies & procedures to maintain financial discipline for improving your cash-flow and profitability? https://lnkd.in/fYQYgSK #cashflow #profitability #workingcapital #finance #financialdiscipline #healthyworkingcapital #strategies #budget #costcontrol #payables #receivables #creditcontrol #inventory #procurement #financialKPIs #review

Procurement – Finance relationship 🤝 As we know in some companies procurement reports directly to finance and in some they are separate functions supervised by the top management. There are challenges in procurement that need to be addressed by both functions together. 📌Purchase planning – budget needs to be decided for future orders. To eliminate stockout and to ensure enough stock at required times, inventory management approaches should be defined such as JIT, safety stock and ABC analysis. 📌Payment terms – The expectation of finance should be clear on payment terms and they need to be adjusted according to reasonable requirements from the manufacturers and suppliers. It means, specific approaches should be considered based on the cooperation level with the manufacturers. Any requirements of the finance need to be coordinated and approved by the suppliers in advance. 📌Supplier, manufacturer relationship – Payment dates, meeting financial obligations, related documentation etc. are all measures that shape the relationship with the external stakeholders. Procurement is the number one point of contact with all these stakeholders, therefore any such requirements from them needs to get procurement engagement and consent too. 📌Potential for fraud, bribery etc. – Internal policy, related international standards, regular monitoring need to be taken into account in order to eliminate potential unethical practices. The finance has certain responsibilities to monitor these. 📌Rewarding – this may be the top management’s responsibility to decide on financial incentives however finance could offer measures to calculate the amount of financial reward that could be offered to the procurement team. Leave your comments if you believe there are more issues to address. #procurement

Cracking the code on cost control A few years ago, I worked with a controller who uncovered a significant cost issue through careful analysis. The company’s shipping expenses were unusually high, but the root cause wasn’t immediately apparent. By performing a flux analysis, he discovered that a supplier had been consistently overcharging for shipping by applying rates higher than the contract Rectifying this saved the company lakhs annually. This is when i learnt : A controller’s role isn’t just about reporting numbers but challenging and understanding them. Below are some practical steps to stay on top of costs: ➡️Regularly match actual expenses to the budget and agreements ➡️Analyze cost variances over time to identify spikes, trends, or irregularities. ➡️Periodically review invoices and contracts to ensure suppliers are charging correctly. ➡️Collaborate with department heads to ensure accountability for spending and to identify areas for optimization. ➡️Simulate the impact of variable costs, like raw materials or logistics, and prepare proactive strategies to manage risks. Stay Vigilant and ask the right questions.. #costcontrol #controller #cfo #finance #finops