The CFO, or Chief Financial Officer, is responsible for the direction of the financial activities of the company. His tasks range from budgeting, forecasting and reporting to drafting financial statements, financial management and risk
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His activities are directly linked to those of the company’s production department. Therefore, production planning and scheduling activities are also of primary interest to the CFO.
Production performance has impacts on available liquidity and operating margin. In fact, the reduction of lead time, in addition to improving the level of service to its customers, also brings benefits to corporate finance. The level of capital invested is in fact linked, among other things, also to the materials in process (WIP) and consequently to the duration of this, or lead time. Reducing the crossing time of a product reduces the time in which it remains present in the company and therefore the inventory levels. Reducing WIP levels therefore reduces fixed capital and increases working capital. In this way, the financial area of the company frees up liquidity to be able to invest in other activities.
Reducing lead time also increases resource productivity, which allows growing companies to avoid further investments in machinery (fixed assets) and therefore to maintain a greater share of available working capital.
In addition, better resource management allows you to increase factory efficiency and consequently operating margins.
Tools to improve production planning capabilities
The best tools to increase the company’s planning capacity are APS, departmental management software. These software allow you to improve production performance with a significant impact on the company’s financial KPIs.
APS (Advanced Planning and Scheduling) software is therefore also useful for the CFO, as it guarantees visibility over the production process and the ability to evaluate the company and production from an economic-financial point of view more immediately and without barriers.
The benefits of an APS for a CFO
An APS software allows the CFO to have significant benefits, such as:
- Greater inventory turnover with improved cash flow, faster ROI and more precise budgeting;
- Sharing of production plans between Supply Chain Manager and CFO to assess their feasibility from a financial point of view;
- Increased level of service with a reduction in the time needed to collect receivables, an increase in company value and the amount of liquidity;
- Greater visibility on production with consequent greater awareness;
- Reduction of cash flow and consequent reduction of fixed capital;
- Reduction of WIP with decrease in fixed capital.
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