COVID-19 has severely challenged and exposed gaping weaknesses in financial planning and analysis (FP&A) for manufacturing. Forecasts and models based on traditional historical data failed in the face of a massive and unique disruption. Finance and accounting departments rapidly retreated and focused on forecasting cash to support business survival—critically important, but could more have been done? What lessons should we learn about how the FP&A function must improve for the future?
The most important lesson is the need for an integrated, very near real-time operational and financial model of the organization. This model needs to be causal and reflect the reality of resources and processes for the entire organization, not just production, and not just for financial reporting. COVID-19 affected every part of the organization. An important element of causal modeling is the nature or responsiveness of resource use (and the related cost flows) as fixed and proportional (or any other relationship). These definitions are contentious because they are often misunderstood and mis-applied; done correctly they provide deep insight into marginal costing as well as profitability, and facilitate cash flow analytics. Some would argue that COVID-19 made all costs proportional, but that is an incorrect characterization. COVID-19 made many costs avoidable (both fixed and proportional costs) that had never been considered avoidable before. The characteristics of fixed and proportional relate resource use and cost to output whether the objective of the work is regulatory compliance, making payments, or producing a product. Manufacturing has long used real-time operational systems for production, but finance is generally far from integrating financial information with operational systems in real time. The technologies and methodologies are available, but the finance and accounting profession have not embraced the importance of managerial costing knowledge for internal decision support.
第二个重要课程是需要为客户盈利能力创造因果模型，远远超出产品成本。客户的盈利能力受到与获取和管理客户相关的许多非制造成本，例如营销和销售成本，折扣，订单大小/频率/复杂性，更改请求，订购频率，客户盈利信息等。当您在生产能力有限时，难以确定如何在没有此信息的情况下优先考虑客户，因为Covid-19期间的情况往往是常见的。在正常时期，全面的客户盈利信息可以大大提高组织的战略重点和盈利能力。
第三个区域Covid-19暴露为主要的风险区域，盈利限制是供应链。这长期以来一直是重点减少的领域。然而，Covid-19正在重新定义供应链优化，以更加强调连续性，生存能力，可用性和位置。投资者在苛刻的投资回报率 - 通常通过限制投资 - 但考虑供应链时，可能是一些严重投资甚至垂直整合可能是时候了。
The overarching lesson from COVID-19 is the need for continuous, causal, and agile operational and financial planning—including contingency planning for severe global events. Government agencies and the military continuously plan, exercise, or wargame for extraordinary contingencies—these involve the initial response, and the ability to maintain a sustained response. While manufacturing companies aren’t in the emergency response business, they must be economically resilient, which means planning to maintain an economically viable level of production and sales. Financial planning and analysis done with strong awareness of operational needs and a causal model of economic realities can be a competitive advantage for a company. Expanding the capabilities of FP&A beyond external financial reporting results by developing more robust models for internal decision support and operational systems integration is a top priority and a first critical step. The Institute of Management Accounting’s Profitability Analytics Framework and Conceptual Framework for Managerial Costing Statements on Management Accounting, a new Profitability Analytics Center of Excellence, and the Resource Consumption Accounting Institute offer information and guidance to improve FP&A’s operational and causal focus and modeling for internal decision support.
