Embedding Visibility and Accountability into Supply Chain Finance
A multi-billion dollar global consumer products manufacturing company was writing off several million dollars each month due to inconsistent processes, lack of controls and limited visibility around inventory transactions. Inventory movement (e.g., intercompany/3PL, normal course of processing) and writeoffs (e.g., damaged, obsolete) were largely entered manually into the Company’s home-grown manufacturing system, as it was not fully programmed to record all inventory movement automatically. Warehouse personnel tagged each transaction with a “reason code” to map through the manufacturing system, subledger and GL. However, inconsistent usage of the codes across facilities resulted in financial data that comingled inventory processing and true writeoffs. The existing operational reporting did not provide warehouse management with 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 writeoffs in the millions.
Actionable Business Analytics
Process & Controls Implementation
Accounting Policies & Procedures
Process Redesign – Accordion 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 – Accordion redesigned the current operational report distributed to warehouse management, including a process for feedback between Supply Chain and Finance. At our recommendation, the Company hired 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.
Accordion partnered with Company management to 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.