How does driver-based forecasting apply to Manufacturing Organisations?
Manufacturing cycles vary from short continuous production runs to projects lasting many weeks and months. Unique to manufacturing is the need to accumulate direct engineering, production and supplier costs to WIP and Finished Good inventory accounts to provide a product or project cost value. This accumulated value is then reduced by the cost of sale that matches the revenue timing to recognise a profit or loss.
This methodology can be further complicated in larger organisations by transferring the cost of manufactured products and overheads to the sales department in order to match related revenue streams.
Non financial drivers include product volumes, price and standard cost of products sold which are used to coordinate sales and manufacturing plans.
Argenta Manufacturing, Nu Farm, 3D Systems Asia Pacific, Allied Industrial Engineering and Horizon International NZ Ltd are examples of diverse manufacturers utilising the Cash Focus Gold and Enterprise editions to manage their long term planning and reporting requirements.