Embedding Visibility and Accountability into Supply Chain Finance
The Situation
A multi-billion-dollar consumer products manufacturer was writing off several million dollars each month due to inconsistent processes, lack of controls, and limited visibility around inventory transactions. Inventory movement and write-offs were largely entered manually into the Company’s home-grown system, as it was not fully automated. Company personnel tagged each transaction with a “reason code” to map through the system, subledger, and GL – however, inconsistent usage of the codes resulted in financial data that comingled inventory processing and true write-offs. The existing operational reporting did not provide real-time visibility to monitor transactions, and Company management did not mandate accountability and ownership of results. With little confidence in the data integrity, cost accounting consistently booked write-offs in the millions.
Services
Big Data Analytics
Process & Controls Implementation
Accounting Policies & Procedures
The Execution
Process Redesign:Worked closely with the cost accounting, finance, supply chain, IT, and internal audit teams to redesign inventory transaction coding with the appropriate financial impact, operational use cases, and technological programming, including:
- Site visits to key manufacturing, distribution and packaging sites to assess the current processes and use cases to record inventory movement and adjustments.
- Mapping of all “reason codes” through the complex systems environments.
- Rationalizing the 69 “reason codes” by streamlining and redefining the list for operational use cases, designing an improved GL accounts structure and developing IT requirements for each code’s business logic.
- Training 100+ warehouse personnel across 23 facilities nationwide on the new process.
- Defining roles and responsibilities with Company management to drive accountability.
Reporting Design:
- Redesigned the current operational report distributed to warehouse management, including a process for feedback between supply chain and finance.
- Recommended that the Company hire an inventory control manager to liaison between supply chain and finance – to whom we transitioned the roll out and management of the new reporting process.
The Results
Accordion partnered with the Company’s management team to successfully redesign their inventory transaction coding and financial mapping, establish a reporting and monitoring process for accountability, and roll out training of the new process at all facilities nationwide.