The Big Opportunity for the Office of Finance

The Opportunity

Focus and ContextGestalts - Dalmatian Dog

Agenda

The Value within your

Organisation

The Value of Finance

Chris Catto

The Opportunity, The Audience

- Confused Conversation - Speaking a different Language- Not understanding Perspective

-Different Goals-Who is the Client?

- What is your Focus?

Chris Catto

Power of AuthorityTheoretical and Practical

Theoretical – Authority in some area of intellectual inquiry

Legitimate Authority - The establishment of a robust right to rule depends on the fact that each citizen rightly takes as a reason for obedience that it has a moral duty owed

to the authority.- Justified Coercion

- Capacity to Impose- Right to Rule

Stanford Encyclopaedia of Philosophy

Milgram Experiment – Stanley Milgram, Yale University

Chris Catto

How does Finance add Value through Partnering?

1) Positioning2) Clarity3) Focus

Ultimately Change Process

Chris Catto

PositioningDo your “clients” know what you have to

offer? Or do you assume they know?

Are your conversations framed around what your clients’ “clients” want ,need, think?

Are your reports, questions, and analysis designed to serve internal reporting or

external reporting?

Do you know what your “clients” need to reach their goals and serve their “clients”

Alignment of goals, culture, language, trust, perception

Chris Catto

Strategic Goals

Strategic Plan

Strategic Model

Strategic Action

Strategic Assessment

Strategic Navigation

ClarityBusiness Model, Revenue Drivers, Cost Drivers, Value Streams, Ratios, Conversions, Context, Cause and Effect, Objective Measures,

Trends, Budgets, Forecasts, Cost Volume Profit, ROI, Cost of Capital, Price variance, Volume Variance, Substitution

Tools in the Finance shed to provide clarity in decision making

Activity , Conversion, Volume, Mix, Price, Capacity, Utilisation,

Waste

Chris Catto

Chris Catto

Focus

Technical KnowledgePractical Experience

Customer RelationshipProject Management

Staff Management

Performance is derived fromDesireTools

Opportunity

The Opportunity For Finance

1) Create Time 2) Clarify Direction

3) Catalyst for Continuous

Improvement

Chris Catto

Developed by Taiichi Ohno of Toyota

Kanban, Kaizen, Just-in-time and Target

Costing philosophies are central to the Toyota Production

System that propelled Toyota

from an unknown car manufacturer to one of the worlds’ leading

car manufacturers

Chris Catto

Card System that Signals Capacity

Pull system for consuming resource

Matching use of resources with of capacity

Visualisation of Workflow on Kanban Wall

Resource allocation and Work-in-process minimisation

Plan, measure and manage FLOW

Highlight bottlenecks and improvement opportunities

What is Kanban?

What are Value Streams?

The visualisation of work flow

Map the value creation process from actions required to get the

order through to each natural step in delivering the order.

Kanban – Value Streams?

Consider the natural changes in Work Types

Design, Build, Frame, Research, Analysis, Interview, Write up,

Workshop, Maintenance, After Sales Service, Change Request

Marketing Activity

Design Quotes

and Tenders

Cutting Framing Powder Coating Installing

After Sales

Service

In Progress

Complete

In Progress

Complete

In Progress

Complete

In Progress

Complete

In Progress

Complete

In Progress

Complete

Value Streams 1

Monitoring Capacity - Managing FLOW

Chris Catto

Marketing Activity

Enquiries and

Orders

Vehicle Schedulin

g

Truck Loading

CustomerDelivery

Stock Replenish

After Sales

Service

Value Streams 2

In Progress

Complete

In Progress

Complete

In Progress

Complete

In Progress

Complete

In Progress

Complete

In Progress

Complete

In Progress

Complete

In each value stream – What is you capacity – Staff, hours, machinery, equipment, accommodation.How well are you utilising the capacity? Under of over capacity?

Monitoring Capacity - Managing FLOW

Chris Catto

Marketing Activity

Quotes and

Signed Orders

Job Set Up

Review & Short List

Interview and

Profile

Confirm and Close

After Placement Follow

up

Value Streams 3

In Progress

Complete

In Progress

Complete

In Progress

Complete

In Progress

Complete

In Progress

Complete

In Progress

Complete

In Progress

Complete

Monitoring Capacity - Managing FLOW

Chris Catto

Lean Reporting BoxBox Score Reporting

Day Week Month TargetOperationalLabour hour effi ciency 4.82$ 4.75$ 5.12$ 5.00$ Machine Utilisation 72.0% 77.0% 80.5% 80.0%Failed Orders 2 3 4 0Returns 1 5 10 0Receivable Days 36 27 35 30CapacityProductive 28% 28% 30% 28%Non Productive 50% 22% 21% 23%Available Capacity 22% 50% 49% 49%FinancialIncome 35,714 178,571 752,000 750,000 Direct Purchases 13,571 67,857 285,760 285,000 0.38Direct Labour 12,143 60,714 255,680 255,000 0.34Value Stream Profit 10,000 50,000 210,560 210,000

Brian Maskell - BMA Inc Lean Accounting Leaders www.maskell.com

Where is CPM and management reporting heading?

1) Office-of-finance CPM — largely involves the improvement of financial processes

2) Strategic CPM — supports organization wide transformation and growth

Chris Catto

Clarity

PositioningFocus

Performance is derived fromDesireTools

Opportunity

The Opportunity For Finance

1) Create Time 2) Clarify Direction

3) Catalyst for Continuous

Improvement

Chris Catto

Ultimately we are Change Agents